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Your retail installment contract explained.
This information is provided solely as a guide to help illustrate some of the more frequently asked about
components of a Retail Installment Sales Contract (RISC). Your form may vary. Make sure you read your entire
agreement prior to signing. Just like with any contract, carefully review to ensure all lines are populated with the
correct information, including the accurate spelling of your name, current address, and agreed upon terms and
calculations. If you’re unsure about anything, never be afraid to ask your dealer for clarification.
The overview.
The RISC documents the agreement between you, as the buyer, and the dealer, as a seller, where you agree to
pay over time for the vehicle, along with any other items related to the vehicle sale you choose to finance, plus the
interest. A dealer can sell and assign the agreement to a finance company, such as VW Credit, Inc.
1. The Truth-in-Lending Disclosure.
This disclosure statement includes the main
components that make up the financing
of your new VW, including the true cost of
credit. This is required by finance companies
to ensure complete transparency
throughout the purchase process.
2.
This is your Annual Percentage Rate—
the cost of obtaining credit expressed
as an annual rate.
What is an APR?
The cost of credit•
Your creditworthiness •
Dealer rate participation •
If you finance through Volkswagen Credit, your RISC obligations are calculated using the simple interest method,
where finance charges are calculated based on the unpaid principal balance of the contract and accrue on a daily
basis. This means that you will always pay more in finance charges at the beginning when your principal balance is
highest. As the principal balance decreases with each payment, the amount of finance charge you pay each month
will decrease. As long as you make your agreed monthly payment on your scheduled due date every month, the
total finance charges you pay will remain the same as in your contract. If you pay early, pay extra, or make additional
advance payments, your total finance charge paid will be less or you may pay off your vehicle early. If you pay your
monthly payments late or if you have payment extensions, you will end up paying more in finance charges over the
term of your agreement.
There are several factors that play into the APR:
3. What is my Finance Charge?
Your Finance Charge is the total cost to
finance your vehicle purchase. This amount
plus your Amount Financed is the total
amount you’re agreeing to pay over the term
of your agreement.
The Amount Financed is the amount of
your purchase that you are financing. It is
the sale of the vehicle plus any fees, prior
credit balance, and optional add-on products
minus any down payment, trade-in, or special
program bonuses. This amount will be your
principal balance at the very beginning of
your agreement.
This is the number of scheduled payments
times the payment amount. The dollar
amount(s), number of payments, and due
date(s) come from the payment schedule
section. These figures are based upon making
payments exactly as scheduled. If you make
payments earlier or later than scheduled per
this contract, the total of payments and total
sale price could change, as less or additional
finance charge may accrue.
4. What is the Amount Financed?
5. What is the Total of Payments?
This completes the calculation and shows
the bigger picture of your “all-in” price. This
is the total amount the vehicle will cost after
all payments are made. These numbers are
broken down in the itemization section and
are dependent on whether or not you make
your agreed payment on time.
6. What is the Total Sale Price?
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