Common Auto Finance Terms
Common Finance Terms Explained by the Perrin Auto Group
Financing is made easy when you visit one of Perrin Auto Group’s dealerships. We get it — financing terms can give you a headache if you’ve never heard some of the lingo before. That’s why our finance team will have your back, guiding you through what everything means from start to finish. To make buying a new car a breeze, we’ve even compiled a list of common terms you’ll most likely hear when purchasing your vehicle. Keep reading to learn more!
Financing
Financing a vehicle gives you the flexibility to pay for the car over time instead of all at once. Typically, drivers make monthly payments over the course of several years until they own the model outright.
Leasing
Leasing essentially means that you’re paying to rent a model for an extended period of time. The terms of a lease typically range between 24-36 months. Once this period ends, you can either return the vehicle to our dealership or purchase it and become its proud owner!
Term
Term means the length of time that’s agreed upon for a loan or lease. You can always inquire about extending a lease term if you’re in need of it.
Principal
Principal is the amount of the loan that you are paying off. This does not include interest.
Down Payment
A down payment is money you’ll pay upfront for the vehicle you’re purchasing or leasing. The amount of your down payment will vary based on various factors, including your credit history and the terms of your agreement. Remember: The more money you put down, the lower your monthly payments will be.
Interest
Interest is the amount of money that the lender charges you for borrowing money. This can add up over time, so don’t forget about this key part of car ownership!
Cash Back
This is a manufacturer incentive that entices drivers to purchase a new car. This is often referred to as a rebate, and you can either use it towards the down payment for your vehicle or receive it as a check.
Trade-in
No matter if you want a new or used vehicle, you can trade your current ride with us and save on your upcoming purchase. Discover your car’s trade-in value today by visiting one of our dealerships’ websites.
Depreciation
This refers to the gradual loss of the original value your car once held. This number starts to tick lower once the model is purchased and continues to decrease over time.
Equity
Equity is the difference between your car's value and how much you still owe on it. For example, if your vehicle is worth $20,000 and you still owe $5,000 on it, you have $15,000 in equity.
Upside Down
This means that you owe more on your vehicle than what its current market value is worth. Negative equity is another term for this situation.