Plain-English auto finance terms.
APR, money factor, residual, cap cost, gap insurance, and the rest. Each definition links to the tool or guide where the term actually matters. New entries on the first of every month.
Certified Pre-Owned (CPO), explained
A CPO car is a used vehicle inspected and backed by the manufacturer with an extended warranty and other perks.
Debt-to-income ratio (DTI), explained
Your debt-to-income ratio shows lenders what percentage of your monthly income goes toward debt payments including your proposed car loan.
GAP insurance, explained
GAP insurance covers the difference between what you owe and what your insurer pays if your car is totaled.
Money factor, explained
Money factor is the lease equivalent of an interest rate, expressed as a tiny decimal that looks confusing but isn't.
Residual value, explained
Residual value is what the leasing company predicts your car will be worth when your lease ends.