Trading in a financed car with negative equity can feel like a tricky situation. It’s a common predicament, where the car’s value is less than what you owe on the loan. Understanding the options, from selling the car to negotiating with your lender, is crucial. This guide walks you through the complexities, helping you navigate this often-overlooked aspect of car ownership.
We’ll explore the concept of negative equity, examine various strategies for dealing with it, and delve into the potential impacts on your credit score and future car purchases. This comprehensive overview will empower you to make informed decisions, minimizing the financial and emotional strain.
Understanding Negative Equity
Owning a car you financed can feel great, but sometimes, things don’t go exactly as planned. One common situation is negative equity, where the value of your car is less than what you still owe on your loan. Understanding this concept is key to making informed decisions about your car ownership.
Definition of Negative Equity
Negative equity in a financed car loan occurs when the current market value of your vehicle is lower than the outstanding loan balance. Essentially, you owe more on the loan than the car is worth.
How Negative Equity Arises
Several factors contribute to the development of negative equity. Depreciation, a natural decrease in a car’s value over time, is a significant driver. Market fluctuations, economic downturns, and even the car’s mileage and condition can also impact its worth. Furthermore, if you’ve financed a car above its market value, you start with negative equity from the outset.
Also, if you experience a substantial drop in the car’s value due to unforeseen events like accidents or significant mechanical issues, you’ll likely fall into negative equity.
Step-by-Step Example of Negative Equity Development
Let’s say you purchased a car for $25,000 and financed $20,000. The car’s value depreciates steadily, decreasing to $18,000 after a year. At this point, your outstanding loan balance is still $18,000. The difference ($18,000 – $18,000) is zero. As time passes, the outstanding loan balance doesn’t decrease, but the car value continues to depreciate to $15,000.
The gap between the loan balance ($20,000) and the car’s value ($15,000) is now $5,000, creating negative equity.
Calculating Negative Equity
To calculate negative equity, subtract the current market value of your car from the outstanding loan balance. The result is the amount of negative equity.
Example: Current Market Value = $15,000; Outstanding Loan Balance = $20,000; Negative Equity = $20,000 – $15,000 = $5,000.
Scenarios of Negative Equity Buildup
The rate of negative equity buildup depends on several factors, including the car’s initial value, loan term, and interest rates. The table below illustrates how these variables impact negative equity development.
| Scenario | Initial Car Value | Loan Amount | Loan Term (years) | Estimated Value after 3 years | Negative Equity after 3 years |
|---|---|---|---|---|---|
| 1 | $25,000 | $20,000 | 5 | $18,000 | $2,000 |
| 2 | $30,000 | $25,000 | 7 | $22,000 | $3,000 |
| 3 | $20,000 | $18,000 | 3 | $15,000 | $3,000 |
These scenarios demonstrate that different factors influence the development of negative equity. Understanding these factors can help you make informed decisions about your car financing.
Options for Handling Negative Equity
Navigating negative equity in a financed vehicle can feel daunting, but it’s a situation many find themselves in. Understanding your options is crucial for making an informed decision, minimizing financial impact, and ensuring a smooth transition. The following sections Artikel potential strategies, detailing their advantages, disadvantages, and financial implications.
Identifying Available Options
Several choices are available to buyers facing negative equity. These range from simple solutions to more complex financial maneuvers. Understanding each option’s potential consequences allows for a well-considered approach.
- Negotiating with the lender: This involves directly discussing your situation with your lender. A willingness to engage in open communication and explore potential solutions, like a revised payment plan or loan modification, is key. Consider a payment plan that stretches the loan duration, or a reduction in interest rate. The lender might offer a lower monthly payment if the overall loan term is extended, which might help the borrower manage the debt more easily.
- Selling the vehicle: This is a direct approach, involving listing the car for sale. Factors such as market value, current condition, and any outstanding liens influence the selling price. A well-researched approach to selling can help mitigate losses associated with negative equity. Selling through a reputable online marketplace, or a local dealership can offer different advantages and disadvantages.
It’s essential to consider the potential cost of advertising and potential time involved in the sale process.
- Trading the vehicle: Trading in a car with negative equity can be a viable option if the value of the new vehicle and trade-in are close. Consider the potential for additional financing required to bridge the gap between the value of the new car and the existing loan amount. This option should be compared with the cost of selling the car and any potential loss, as well as the interest rates on the new financing.
Careful consideration of the trade-in value and the costs associated with financing the new vehicle are vital.
- Defaulting on the loan: This is a drastic step that should be carefully considered. While it might seem like a quick fix, the consequences can be severe. It can damage your credit rating, leading to difficulties in obtaining future loans or credit facilities. It is important to consider the potential legal ramifications before taking this course of action.
Comparing Pros and Cons of Each Option
Careful evaluation of the advantages and disadvantages of each strategy is critical to a well-informed decision. Understanding the potential financial ramifications is paramount to making an optimal choice.
| Option | Pros | Cons | Financial Implications |
|---|---|---|---|
| Negotiating with the lender | Potentially avoids repossession, maintains credit history, potentially lower monthly payments | May not always be successful, could still lead to loss, lender may not agree to terms | Could lead to a lower total repayment, but not necessarily eliminating loss. May require a significant time commitment for negotiations. |
| Selling the vehicle | Allows for recoupment of some lost value, immediate cash flow | Time-consuming process, potential loss, risk of not finding a buyer at a satisfactory price. | Realization of the vehicle’s current market value, potentially covering some of the negative equity, but not eliminating it. The loss depends on the sale price and the outstanding loan balance. |
| Trading the vehicle | Potential for acquiring a newer vehicle, potentially offsetting some losses | Potentially needing additional financing, the new vehicle may not be a good fit, loss of potential equity in the trade-in. | Financial impact depends on the trade-in value and the terms of the new loan. |
| Defaulting on the loan | None | Significant damage to credit rating, potential legal action, repossession of the vehicle, and potentially substantial financial penalties. | Long-term financial damage, difficulty obtaining future loans, and legal expenses. |
Potential Financial Implications
Understanding the potential financial ramifications of each option is vital. The table above Artikels some of the financial consequences of each strategy.
Legal Implications of Different Actions
Legal ramifications should be considered when deciding how to handle negative equity. For example, selling the vehicle might involve transferring ownership, which has specific legal procedures. Defaulting on a loan has severe legal consequences, including potential lawsuits and repossession.
Selling the Car with Negative Equity
Getting rid of a car with negative equity can feel like navigating a tricky financial maze. It’s a situation where the car’s value is less than what you owe on it. But don’t worry, there’s a way through this! This section provides a step-by-step guide to selling your vehicle effectively, considering the lender’s role and various sale methods.
The Lender’s Role in the Sale Process
The lender, usually the bank or finance company, holds a crucial position. They’re entitled to the proceeds from the sale to satisfy the outstanding loan balance. It’s vital to understand their procedures for handling the sale. They typically require you to submit the title and proof of sale to them. They’ll then apply the sale proceeds to the loan balance, and any remaining amount might be your responsibility.
Their specific requirements vary, so it’s wise to contact them directly to understand the process thoroughly.
Selling Privately
Selling privately can be a viable option, especially if you’re comfortable with the negotiation process. This route lets you set the price, which might offer a higher return if you price it strategically.
- Market Research: Thoroughly research similar cars in your area to get a realistic market value. Online classifieds and local dealerships can be useful tools. Use these to assess comparable models, years, and conditions. Consider any upgrades or unique features your vehicle might have that enhance its value.
- Pricing Strategy: Pricing is crucial. Consider a price slightly above the market average to allow for negotiation and still achieve a desirable price. Be prepared to adjust your price based on the responses you receive.
- Advertising: Create compelling ads that highlight the car’s condition and key features. Use high-quality pictures and a detailed description. Consider using online classified platforms, social media groups, and local classifieds.
- Negotiation: Be prepared to negotiate. Be firm but flexible. Be polite, professional, and respectful in all communications.
- Documentation: Ensure all the necessary paperwork is in order, including the title, bill of sale, and a copy of your lender’s contact information. Include the full name and contact details of the buyer.
- Transferring Ownership: Once the sale is finalized, promptly transfer the title to the buyer and obtain a signed bill of sale. This is critical for legal compliance and to avoid future issues.
Selling Through a Dealership
A dealership might expedite the process, but they typically take a commission. However, they handle the advertising, negotiation, and paperwork.
- Contacting Dealerships: Reach out to multiple dealerships and discuss the situation. Share details of your vehicle, including the outstanding loan amount.
- Negotiating a Fair Price: Be prepared to discuss your vehicle’s condition, mileage, and any relevant factors that impact its value. Ask about the commission and how it affects the final price.
- Dealership’s Role in Handling Lender: Understand the dealership’s role in notifying your lender and arranging the payoff of the loan. Be sure to obtain confirmation about the procedures involved.
- Transferring Ownership: The dealership will handle the title transfer and ensure all the necessary documents are processed correctly.
Factors Influencing Sale Price
Several factors influence the price of a car with negative equity. These factors include the car’s condition, market demand, mileage, features, and the overall market trend. A car in excellent condition, with low mileage, and desirable features will likely command a higher price.
Pricing Methods
Various methods can help determine an accurate price. One is comparing similar vehicles for sale in the same area. Another is using online tools that provide market value estimations.
- Comparable Car Analysis: Review recent sales of similar cars in your area to get a better idea of the average selling price. Websites, online classifieds, and local dealerships can assist.
- Online Valuation Tools: Utilize online tools that provide estimated values based on various factors, such as the car’s make, model, year, mileage, and condition. These tools offer a starting point for pricing.
Private Sale vs. Dealer Sale: A Comparative Guide
| Feature | Private Sale | Dealer Sale |
|---|---|---|
| Price Negotiation | Direct negotiation with buyer | Negotiation through the dealership |
| Commission | No commission | Commission paid to the dealership |
| Time Investment | Potentially more time for advertising and communication | Potentially less time due to dealership handling many aspects |
| Paperwork | Requires handling title transfer and bill of sale | Dealership handles all the paperwork |
| Market Reach | Limited to your network and online channels | Wider market reach through dealership’s platform |
Refinancing or Loan Modifications
Facing a car loan with negative equity can feel daunting, but it’s not insurmountable. One crucial strategy is refinancing or seeking a loan modification. This approach aims to lower your monthly payments and potentially restore positive equity. This involves negotiating a new loan with a more favorable interest rate and/or payment terms.
Refinancing Process
Refinancing a car loan involves securing a new loan from a lender to pay off your existing loan. This new loan replaces the original, often with a revised interest rate and/or repayment schedule. Key steps typically include application, credit check, appraisal, and final loan approval.
Loan Modification Criteria
Lenders assess various factors when considering a loan modification request. These factors frequently include the borrower’s financial history, current income, debt-to-income ratio, and the overall health of the automotive market. A strong track record of on-time payments, stable employment, and verifiable income documentation greatly improve chances of approval.
Benefits and Drawbacks of Refinancing
Refinancing offers the potential for lower monthly payments, reducing financial strain. A lower interest rate can save significant money over the life of the loan. However, refinancing may involve additional fees or closing costs. It’s essential to weigh these potential benefits against the associated costs. Consider the implications of a potential credit inquiry as well.
Terms and Conditions of Refinancing Programs
Refinancing programs often have specific terms and conditions. These typically include the maximum loan amount, the interest rate range, and the length of the loan. It’s crucial to carefully review the loan documents before signing, understanding all terms, conditions, and any potential penalties.
Loan Modification Examples
Loan modifications can take various forms. A lender might adjust the interest rate to a lower figure, extend the loan term to reduce monthly payments, or forgive a portion of the outstanding principal. Examples include extending the loan term from 60 months to 72 months to lessen the monthly payment, lowering the interest rate from 8% to 6% for better affordability, or a partial write-off of the outstanding balance.
Types of Loan Modifications
Different types of loan modifications cater to various financial situations. Each modification approach comes with unique terms and conditions.
| Type of Modification | Description | Potential Benefits | Potential Drawbacks |
|---|---|---|---|
| Interest Rate Reduction | Lowering the interest rate on the existing loan. | Lower monthly payments, potentially saving money over time. | May not be available in all situations. |
| Loan Term Extension | Increasing the length of the loan to reduce monthly payments. | Lower monthly payments. | Longer repayment period, potentially increasing total interest paid. |
| Principal Forbearance | Temporarily reducing the principal owed. | Reduced monthly payments during the forbearance period. | Principal may need to be repaid later, potentially at a higher rate. |
| Partial Claim Forbearance | A combination of partial forgiveness and a new repayment plan. | Potential reduction in monthly payments and/or overall loan amount. | Repayment schedule can be complex and may involve additional fees. |
Implications for Credit Score
Navigating the complexities of a financed car with negative equity can be tricky, especially when it comes to your credit score. Understanding how this situation affects your creditworthiness is crucial for making informed decisions. This section delves into the impact of negative equity, providing clarity and actionable strategies.Your credit score is a reflection of your creditworthiness, a number that lenders use to assess your risk as a borrower.
A lower score means you’re perceived as a higher risk, which can lead to higher interest rates or loan denials. Negative equity can directly affect this score in various ways, impacting your ability to secure future loans, credit cards, or even rent an apartment.
Impact of Negative Equity on Credit Score
Negative equity arises when the amount you owe on a car loan exceeds the car’s current market value. Lenders often view this as a sign of potential financial difficulty. While the car itself isn’t directly impacting your credit score, the underlying loan can reflect a struggle to meet financial obligations, potentially lowering your credit score. This is because lenders evaluate the repayment history of loans, and any difficulties in meeting the loan terms are seen as a negative factor.
Selling the Car and Credit Reports
Selling a car with negative equity can affect your credit report in several ways. The sale itself might not significantly impact your score if you’ve been making timely payments. However, a payoff from a sale may show up on your credit report as a closed account. This can sometimes indicate a financial adjustment, and the lender will note whether it was a full or partial payoff.
The most important thing to remember is to ensure the sale of the vehicle reflects a resolution to the negative equity rather than ongoing financial struggle.
Loan Modifications and Credit Scores
Loan modifications, such as extending the loan term or reducing the monthly payment, can have varied effects on your credit score. A successful modification, where you continue to make payments on time, can often maintain or even slightly improve your score, showing lenders that you’re managing your debt effectively. Conversely, if you have trouble keeping up with modified payments, your score will likely decline.
The key here is to ensure you understand the terms of the modification and are able to meet the new obligations.
Examples of Credit Score Changes
Consider these hypothetical scenarios:
- Scenario 1: A borrower successfully refinances their car loan, maintaining consistent payments. Their credit score could improve slightly as the lender perceives reduced risk.
- Scenario 2: A borrower sells their car with negative equity and uses the proceeds to pay down other debts. Their credit score could improve significantly, as the negative impact of the car loan is mitigated.
- Scenario 3: A borrower fails to meet the terms of a loan modification. Their credit score will likely decline, reflecting the lender’s perception of higher risk.
Strategies for Mitigating Negative Impact on Credit Scores
Taking proactive steps to mitigate the negative impact of negative equity is crucial. Here are some key strategies:
- Maintain consistent payments on all debts, even after a modification.
- Negotiate a loan modification that allows for manageable payments.
- Explore selling the vehicle to resolve the negative equity.
- Prioritize paying down other debts to reduce overall financial strain.
Credit Score Impact Comparison Table, Trading in a financed car with negative equity
This table summarizes the potential impacts on your credit score based on different actions.
| Action | Potential Credit Score Impact | Explanation |
|---|---|---|
| Successful Refinancing | Slight Improvement or No Change | Lender perceives reduced risk if payments are maintained. |
| Selling the Car (Full Payoff) | No significant change, or slight improvement | Resolves the negative equity, showing responsible debt management. |
| Loan Modification (Successful) | Slight Improvement or No Change | Shows responsible debt management. |
| Loan Modification (Unsuccessful) | Significant Decline | Indicates difficulty in meeting financial obligations. |
Impact on Future Purchases: Trading In A Financed Car With Negative Equity
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Navigating the world of car ownership can sometimes feel like a rollercoaster. While the thrill of the open road is enticing, the reality of financing and maintaining a vehicle can bring unexpected bumps. One such bump is negative equity, and its impact on future purchases can be significant. Understanding how it affects your credit and future loan approvals is crucial for making informed decisions.Negative equity isn’t just a temporary setback; it can cast a long shadow over your financial landscape.
This is particularly true when considering future car purchases. Your credit score, a key factor in loan approval, is significantly affected by this financial situation. It’s important to understand how negative equity can hinder future purchases and what steps you can take to mitigate these challenges.
Future Car Purchase Implications
Negative equity, a situation where the outstanding loan balance exceeds the vehicle’s current market value, can create a significant hurdle for future car purchases. Lenders will scrutinize your credit history more closely when you apply for a new loan. Your existing loan, especially one with negative equity, may be viewed negatively, potentially impacting your overall creditworthiness.
Loan Approval in the Future
Lenders often assess your creditworthiness based on your credit score and your existing debt obligations. A negative equity situation signals potential financial instability, which might cause lenders to be more cautious about approving a new loan. They’ll likely want to see a strong track record of responsible debt management and a healthy credit score to mitigate risk.
Importance of a Good Credit Score
A good credit score is crucial for securing favorable loan terms, including lower interest rates and potentially higher loan amounts. It reflects your ability to manage debt responsibly, a factor lenders prioritize. Maintaining a strong credit score is not just about avoiding negative equity; it’s about securing the best possible financing options in the future.
Strategies to Improve Credit Scores
Several strategies can help you improve your credit score before your next car purchase. Paying your bills on time is paramount. Keeping credit card balances low and utilizing only a portion of your available credit can significantly boost your score. Avoiding unnecessary applications for new credit can also help. Consider contacting a credit counseling agency or financial advisor for personalized guidance.
Illustrations of Negative Equity’s Impact
Imagine a scenario where a buyer purchases a car with a significant loan amount. Due to unforeseen circumstances, the car’s value depreciates rapidly, leading to negative equity. This negative equity can affect future car purchases as lenders may be hesitant to approve a new loan. A buyer who has a consistent history of timely payments and responsible debt management will likely face fewer challenges.
Relationship Between Negative Equity, Credit Score, and Future Loan Approvals
| Negative Equity | Credit Score | Future Loan Approvals |
|---|---|---|
| High | Low | Likely to be denied or have unfavorable terms |
| Moderate | Moderate | Potentially approved, but with higher interest rates or limited loan amounts |
| Low | High | Highly likely to be approved with favorable terms |
A healthy credit score is your best asset when navigating future car purchases.
Negotiating with the Lender
Facing a car loan with negative equity can feel daunting, but remember, you’re not alone. Negotiating with your lender is a crucial step in managing this situation, and it’s often more achievable than you might think. A proactive approach, coupled with clear communication, can significantly improve your options.Successfully navigating this process involves understanding your lender’s perspective, presenting your case effectively, and remaining persistent, yet respectful.
This isn’t about demanding the impossible; it’s about presenting a reasonable solution that benefits both parties.
Strategies for Negotiating with the Lender
Effective negotiation hinges on preparation. Gather all relevant documents, including loan agreements, payment history, and any supporting evidence of your financial stability. This allows you to present a complete picture of your situation. Knowing your lender’s terms and conditions gives you a stronger position for negotiation.
Importance of Clear Communication with the Lender
Open and honest communication is paramount. Avoid ambiguity; clearly articulate your financial situation and desired outcome. Maintaining a professional demeanor, even during difficult conversations, is key to fostering a productive dialogue. Listen carefully to your lender’s responses and address any concerns they may raise. Document all communication for future reference.
Potential Outcomes of Negotiations
Negotiations can yield various outcomes. A favorable result might involve a loan modification, reducing your monthly payments, or extending your loan term. In some cases, a lower interest rate might be negotiated. A less favorable outcome, while disappointing, is still an opportunity for learning and adaptation. Remember, the aim is to find a solution that works for both parties.
Examples of Successful Negotiation Tactics
Present a compelling case for why a modification would benefit both you and the lender. Highlight your consistent payment history and demonstrate a genuine commitment to repaying the debt. Offering a slightly higher payment than your current minimum, but with a reduced interest rate, can be an attractive option for your lender. Demonstrate a clear understanding of your financial situation.
Examples of Common Negotiation Points
Common points for negotiation include reducing the loan amount by the negative equity, adjusting monthly payments to a more manageable level, or extending the loan term. Consider a partial payoff of the loan to reduce the outstanding balance, even if it means negotiating a lower payoff amount. A willingness to show good faith and commitment to repayment is often a strong negotiating point.
Negotiation Process Table
| Step | Action | Example |
|---|---|---|
| 1. Preparation | Gather documents, understand terms, analyze financial situation. | Review loan agreement, calculate negative equity, analyze income and expenses. |
| 2. Initial Contact | Reach out to the lender, express willingness to negotiate. | “I’d like to discuss options for managing my loan given the current negative equity.” |
| 3. Presenting Your Case | Articulate your financial situation, propose a solution. | “I’ve been consistently making payments on time and have been actively seeking ways to improve my financial situation.” |
| 4. Listening and Responding | Listen attentively to lender’s concerns, address them respectfully. | “I understand your concerns regarding the negative equity. I’m willing to explore options to address this.” |
| 5. Negotiation | Discuss proposed solutions, offer alternatives. | “I propose a reduced monthly payment for the next 6 months with a revised repayment schedule.” |
| 6. Agreement | Formalize the agreement in writing, including any modifications. | Sign a loan modification agreement outlining the new terms. |
Alternatives to Traditional Financing
Flipping the script on car buying! Traditional financing is just one option in the vast landscape of car acquisition. Exploring alternative methods can unlock opportunities and potentially lower your costs, so let’s dive in.Alternative financing options offer a wider range of choices beyond the typical bank loan. They can be tailored to individual circumstances and budgets, but also come with unique pros and cons.
Understanding these variations will empower you to make the best decision for your situation.
Alternative Financing Options
Different financial strategies are available for acquiring a car. These options often differ in their requirements, terms, and the level of risk involved.
- Lease Purchase Options: A lease purchase agreement combines the benefits of leasing with the flexibility of ownership. This method allows you to purchase the vehicle at the end of the lease term. This often involves lower monthly payments compared to a traditional loan, but the total cost over the lease period can be higher.
- Retail Financing Programs: These programs are often offered by dealerships. They provide various financing options tailored to specific needs. These programs might have competitive interest rates and terms but may also come with additional fees.
- Peer-to-Peer Lending: Platforms connect individuals looking to lend money with those seeking a loan. This can provide an alternative source of funding for a car purchase, but interest rates and terms may vary significantly compared to traditional lenders.
- Government Assistance Programs: Some government initiatives may provide subsidies or incentives for purchasing electric or fuel-efficient vehicles. These programs can significantly reduce the overall cost of a car, especially for environmentally conscious consumers.
- Buy Here, Pay Here Dealerships: These dealerships often provide financing options directly, potentially appealing to those with less-than-perfect credit histories. However, interest rates and fees can be substantially higher than traditional lenders.
Benefits and Drawbacks of Alternative Financing Options
Understanding the advantages and disadvantages of each method is crucial for making an informed choice.
- Lease Purchase Options: Lower monthly payments are often a benefit, but the total cost of the car over the lease period can sometimes be higher. Flexibility to purchase at the end of the lease is a key advantage.
- Retail Financing Programs: Competitive interest rates are often a benefit, but it’s essential to thoroughly examine the terms and fees to avoid hidden costs.
- Peer-to-Peer Lending: This can be an option for those seeking a loan outside the traditional banking system. However, the interest rates and terms may not always be as favorable as traditional loans. Potential for faster funding can be an advantage.
- Government Assistance Programs: Significant savings on the car’s price are a major benefit. Eligibility criteria must be met to qualify for these programs. These programs can be a great way to make a car purchase more affordable.
- Buy Here, Pay Here Dealerships: This can be a solution for those with less-than-perfect credit, but interest rates and fees can be high. It’s essential to compare terms and fees carefully.
Factors to Consider When Choosing
A critical assessment of various factors is vital before committing to any alternative financing option.
- Credit Score: A lower credit score can impact the terms offered by some alternative lenders. Credit history significantly influences the terms of the loan.
- Interest Rates: Compare interest rates across different options carefully. Interest rates vary considerably between lenders.
- Fees and Charges: Don’t overlook hidden fees and charges. Understand all associated fees to avoid financial surprises.
- Total Cost of Ownership: Evaluate the total cost over the life of the loan. Look beyond the monthly payment and consider the total cost of the vehicle.
- Flexibility and Terms: The terms and flexibility of the loan significantly impact your ability to manage payments and meet obligations. Review the terms and conditions of the financing carefully.
Comparison of Alternative and Traditional Financing
| Feature | Traditional Car Loan | Alternative Financing Options |
|---|---|---|
| Interest Rates | Generally moderate | Can vary significantly |
| Credit Score Impact | Significant | Can be significant or less impactful |
| Fees and Charges | Generally transparent | Can be opaque and hidden |
| Application Process | Relatively straightforward | Can be more complex |
| Terms and Conditions | Usually standardized | Can be customized or non-standard |
