Finance Terms Explained | Gainesville FL
Finance Terms Explained in Gainesville, FL
It’s pretty rare that anyone pays for a vehicle in cash anymore—financing is a more popular option. These days, even the prices of used cars are so steep that many people aren’t able to buy without financing. It’s no secret that many first-time car buyers might be stressed about the prospect of financing. Here at Parks Ford of Gainesville, we understand that. This is usually because of the considerable amount of financial requirements, credit scores and general options for financing. We love serving our customers, and we're ready to help you get behind the wheel of the awesome car, truck or SUV you deserve. The finance department at our dealership is committed to providing our customers with a stress-free and hassle-free experience. Keep reading to learn more about the average vehicle finance terms that are accessible for most buyers.
Finance
Financing a new or used model means you borrow a certain amount of money from a lender or bank. You have to repay the loan over a specified time period and at a predetermined interest rate. Paying the loan back in full means you are the owner of the vehicle.
Leasing
Leasing is like renting. You’ll usually put down an initial payment, pay monthly and then at the end of the term, you either return the vehicle or agree to buy it. You can lease for as low as 24 months to as long as 60 months in some cases.
Term
The time when the loan or lease is active is called the term. Most of the time, the shorter the terms, the bigger the payments. However, if you have a shorter term, chances are the interest rates will be lower. Longer terms mean smaller payment but higher rates.
Principal
Principal means the amount you have left to pay on the loan.
Money Down
It can also be called a down payment or the amount you pay when you sign on the dotted line for your new or used model. More money down, less payments overall.
Interest
For the privilege of taking out a loan with them, your lender will charge you a fee, also known as interest.
APR
The annual percentage rate, or APR, is the thorough cost of borrowing money. It consists of other fees and also interest, and it’s decided by a couple different factors, like your credit score, term length and age of vehicle.
Cash Back
This is a popular incentive dealers give to get people to purchase. It either consists of getting a check after you buy or you can apply it to your initial payment and lower your total purchase price.
Rebate
Another wanted incentive, a rebate is applied only after you buy. You’ll receive a check for the amount or the dealer will send you a check.
Trade-in
Trading in means you bring your old model to us to exchange it for equity toward your next purchase with us.
Depreciation
A vehicle lessening in value over a period of time is what’s also known as depreciation. It happens to every single vehicle and happens all through a vehicle’s lifetime.
Equity
Equity is the part of your vehicle you actually own while you’re still paying on your loan. Your equity can be calculated by taking out the amount you owe from your vehicle’s value. For example, if your vehicle is worth $20,000 and you owe $2,000 to the lender, you own $18,000 in equity. When you finish your loan, you have 100% equity in the car.
Upside Down
Owing more than your car is worth is what makes you upside down in a loan. This is a tough situation to find yourself in because it makes selling the vehicle extremely tough. Avoiding being upside down if at all possible is best.
If you have further questions, give us a call or visit us at 3333 North Main St., Gainesville, FL 32609. We look forward to serving our customers from Alachua, Starke, Ocala and Lake City.
