Buying a new vehicle is an exciting experience, but it can get confusing when it comes to understanding the ins and outs of financing your new vehicle. Luckily, it’s fairly easy to clear up the confusion if you know a few new car financing terms.
- Finance: If you are “financing” your vehicle, you are borrowing money to buy your new car. This results in making monthly payments to a lender (bank, dealership, or other lending institution) to pay off your purchase.
- Interest rate: Interest is essentially the fee the lender charges you to borrow money. It is expressed as a percentage of the loan’s amount. Generally speaking, those with good credit scores get lower interest rates.
- APR: APR stands for annual percentage rate, which is what some lenders call their interest rate.
- Principal: Your principal is the amount of your loan before interest.
- Term: “Loan term” simply refers to the length of your loan. In general, with a longer loan term, you’ll have a lower monthly payment.
- Trade-In: “Trade-in” refers to the process of selling your old car to the dealership for an amount deducted from the cost of your new vehicle purchase.
If you still have question when it comes to financing terms or any of the other ins and out of the car-shopping process, stop into Purifoy Chevrolet and we’ll be happy to help.