Skip to Main Content

Finance Terms to Know

Finance Terms
    Jumping into financing is like learning a whole new language. Before you head over to the dealership, you may want to familiarize yourself with some of the most common finance terms in the business. It’ll help you feel more prepared, confident, and it’ll even out the playing field.

    Annual Percentage Rate (APR) – This is the rate charged for borrowing a loan. When you take out a loan to buy a car, you’ll have to pay that loan back with interest (which can be negotiated). The APR represents that interest over a year.

    Credit Score     – A number that represents your credit history and that banks use to assess the financial risk you pose by giving you a loan. The higher your credit score, the better, and the more likely a bank is to give you a loan with reduced interest.
      currency
        Down Payment – The amount of money you pay up front when buying or leasing a car on credit. This amount can be anything you want as long as you can afford it. The more you pay up front, the less you’ll have to pay per month—and in interest.

        Negotiated Price of the Vehicle         – The final price of the vehicle as agreed by the buyer and the seller, after all factors are taken into account—including rebates, trade-ins, discounts, and other offers.

        Trade-In – Selling a vehicle you already own as part of purchasing a new one. The dealership will assess the value of the vehicle and offer you an amount that can be used toward your down payment.