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Understanding Car Buying Lingo | Learn Car Dealership Terms

Understanding Car Buying Lingo | Learn Car Dealership Terms

Hi. I’m Joel Bassam,
director of marketing for Easterns Automotive Group. And today I want to share the
meaning of some car lingos that people just throw
around that we think you should know before you come in. First one is LTV. LTV stands for loan
to value ratio. So if you have an $18,000
loan on a $20,000 car, that’s a 90% LTV. Next are a few phrases
that actually all mean the same thing and refer
to someone’s position in an existing loan. A person is
upside-down, underwater, or have negative equity in
their existing car loan. All these phrases mean that
the amount that someone owes is greater than the value that
the car is currently worth. This is something
that can actually increase the LTV of a new loan. If you roll that negative
equity into the future loan. Two similar acronyms that you
hear a lot are PTI and DTI. PTI stands for
payment to income. And this is your monthly
payment that you’re going to be paying on
your new loan, divided by your pre-tax income. Generally speaking,
financial institutions want this number around 15%. DTI stands for debt
to income, which is a total of all of a
person’s monthly debt, divided by the pre-tax income. That total debt
will include things like mortgage or rent, car
payments, credit card payments, and more. This number can be
a little bit tricky because certain
lenders will count certain things towards debt. But generally speaking,
most financing partners want that number up 50%. The last two we want you to
know are the most simple. POI and POR. POI stands for proof of
income, like a pay stub. And POR stands for
proof of residency, like a bill with
your address on it. Hopefully, this will help
clear up some of the car lingo that’s used the next time
that you’re in the market. And for more content just like
this, you can go to our website or subscribe to our
YouTube channel.

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