Audi Finance Glossary

Definitions for some common terms and words used in the car finance industry.

Annual Percentage Rate

This is an American term for Comparison Rate, which is sometimes used by Australian companies.

Balloon

See Residual Value.

Car Finance

See Vehicle Finance.

Car Loan

This personal finance product allows the customer to borrow the funds for purchasing a vehicle by using the vehicle itself as security for the loan.

Chattel Mortgage

This is a commercial finance product in which the customer takes ownership of the vehicle immediately, while the vehicle (the chattel) is mortgaged to the financier as security.

CHP

Acronym for Commercial Hire Purchase.

Commercial Hire Purchase

This commercial finance product entails customer hires a car or commercial vehicle from the financier for a fixed monthly repayment over a set period of time.

Consumer Loan

See Car Loan.

Depreciation Limit

The maximum asset value that is allowed by the Australian Tax Office when depreciating a motor vehicle. For the 2010-2011 financial year this value is $57,466.00.

Early Termination Fee

Some financiers will apply this one-off fee if you payout a vehicle finance contract early. To find out if an early termination fee applies to your contract, please refer to our Terms and Conditions booklet or contact your local Audi Finance Dealership.

Finance Lease

This commercial finance product means that the financier purchases the vehicle on the customer's behalf, and then leases it back to them for a specified period of time.

Hire Purchase

See Commercial Hire Purchase.

LCT

Stands for Luxury Car Tax.

Luxury Car Tax

If a vehicle’s price exceeds the Luxury Car Tax Threshold, this tax is applicable. Luxury Car Tax is calculated as 33% of the GST exclusive portion of the vehicle's purchase price that is over the Luxury Car Tax Threshold.

Luxury Car Tax Threshold

This is the minimum price at which the LCT is applicable. This is always set at the same amount as the Depreciation Limit. For the 2010-2011 financial year, the threshold is $57,466.00.

Novated Lease

This finance option allows customers to salary package their vehicle. The employee can lease a car and their employer takes on the employee's obligations under the lease and pays the monthly lease rentals from the employee's pre-tax income.

Residual Value

Also known as a balloon payment, this is the lump sum owed to the financier at the end of a loan's term.

Salary Packaging

Products such as Novated Lease allow employees to package vehicles into an employee’s remuneration package.

Security

In case a borrower defaults on their loan obligations, the financier is able to claim the asset(s), such as the vehicle that was laid as security for the loan.

Term

The total length of a loan.

Vehicle Finance

A general term referring to borrowing money to purchase vehicles. Generally "car finance" (as opposed to "car loan") refers to commercial car finance, such as Car Lease (Finance Lease), Commercial Hire Purchase (CHP or HP), Chattel Mortgage and Novated Lease.