Common Terms used in ADP’s Financing Programs

FICO SCORE

Fair, Isaac & Co. score—a measure of the creditworthiness of a consumer. We consider scores above 650 to be “A” credit, scores from 550 to 650 to be “B” credit, and scores below 550 to be “C” credit.

DISCOUNT

The discount is the price the client pays to have the contract purchased; it is ADP’s fee. It works much like the fee that credit cards charge for the ability to accept payments on their card. Generally speaking, the discount is on a sliding scale based on the term of the contract.

RESERVE

The reserve is the amount that ADP holds out of each contract to cover potential contract defaults. This reserve, which is placed in a pooled account, is the client's money, and the client will receive a detailed monthly report showing the reserve amount, contract balances remaining on ADP’s books and any delinquencies. At the end of the first year, and every six months thereafter, ADP will review the client's reserve and refunds excess monies.

PROCEEDS

(Payout To CLIENT) Principal amount financed less discount and reserve, paid to the client on the purchase of a contract.

SIGHT DRAFT

Summary supplied to the client with his or her payout check, detailing the names of the contracts purchased and itemizing the proceeds, and showing disposition of the non-purchased contracts.

OBLIGOR DEFAULT

The obligor is the consumer. If the consumer does not make his payments, and ADP determines the contract is uncollectible, the consumer is in default of his or her contract.

CLIENT DEFAULT

ADP’s client (the business) is in default of its agreement with ADP should it:

commit fraud
close its doors and not complete delivery of the service or product to the consumer under terms of a contract purchased by ADP,
collect payments and not forward them to ADP, or
commit any other breach of its agreement with ADP.

CO‑SIGNER

A co‑signer is any credit worthy individual who signs a contract on behalf of the consumer. It is important that they realize they are responsible for payment in full under the terms of the contract.

FIRST PAYMENT DEFAULT

In many ADP plans, there is a provision for full replacement of any contract that defaults on the first payment. This means the client must replace the defaulted contract with another similar contract. After the first payment has been made by the consumer, recourse is only to the reserve.

FULL RECOURSE

On some ADP plans when the credit risk is unusually high, there is a provision for full replacement of all contracts that default. This means the client must replace the defaulted contract with another similar contract.

EFT OR AUTO DEBIT

The consumer or co‑signer makes the payment via an automatic withdrawal from a checking account, savings account or credit card account.