Certificates of Automobile Receivables

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Certificates of Automobile Receivables (CAR)

Pass-through securities backed by automobile loan receivables.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Certificate of Automobile Receivables

A derivative whose value is derived from the receivables on a car loan. This entitles the owner to a claim on the principal and interest payments on the particular car loans underpinning the security. The equivalent of the coupon on CARS is a percentage of the interest and principal paid on car loans. An obvious risk associated with CARS is the possibility that a substantial number of loans will default. See also: Credit risk, Mortgage-backed security.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
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