Payment Saver Loan
Also known as a lease-like loan. It combines features of a lease and a conventional auto loan and is most often offered by credit unions. Payments can be as much as 30 percent less than a conventional amortized loan, because a lease-like loan has a big balloon payment at the end. Requires no down payment or security deposit. Mileage allowance is usually higher. At the end of the loan, the borrower can sell or trade in the car and pay off the loan balance, or keep the car and refinance the amount owed, or return the car to the lender as payment for the balance.
Periodic Rate
An interest rate described in relation to a specific amount of time. The monthly periodic rate, for example, is the cost of credit per month; the daily periodic rate is the cost of credit per day.
Personal Property Liability
Part of an auto insurance policy that pays for damages you may cause to another person's car or property.
PIP
Also known as personal injury protection or medical payments coverage. Part of an auto insurance policy that pays for medical expenses and lost wages to you and any passengers in your vehicle after an accident.
Pre-computed Loan
In this type of loan, the interest owed over the life of the loan is calculated using a standard amortization table. Once you sign on the dotted line, you're obligated to pay back principal plus the full amount of interest that will accrue over the entire term of the loan.
Pre-qualification
A non-binding evaluation of a prospective borrower's finances to determine how much he or she can borrow and on what terms.
Prepayment Penalty
When a lender charges the borrower for paying off the loan before the end of the term.
Price Protection
Often, when a manufacturer announces a price increase during a model year, it will guarantee that vehicles ordered by a specified date will be delivered at the former price.
Prime For Life
A type of line of credit loan coveted by consumers that fixes the interest at the prime rate for the life of the loan.
Purchase Option
The portion of a lease that establishes the amount a lessee may pay the lessor at the end of the lease to purchase the vehicle. The price is usually the residual value.
