A considerable amount of money is borrowed by buyers as car loan every year. Purchasing a new car includes big numbers which means it is an investment that need careful thinking and planning. It is one of the second most important decisions that a person makes after house purchase. The process also requires a critical understanding of vehicle financing options available in market. This article is devoted to some special car financing basics for beginners that get counted among primary car financing jargons.
Annual Percentage Rate: One of the most commonly used term when we speak of vehicle financing. The lending law needs a Annual Percentage Rate (APR) to define accurate value of credit cost. Calculation of this figure helps comparing different used car financing and new car financing options with each other. APR is also used in reflecting interest rates, always remember, lower the interest rate, beneficial the car loan is.
Amount Financed: It is the total amount of borrowed money used by subject. The amount includes the principle amount that was borrowed as car loan, plus all those charges that aren’t part of finance, minus any and all charges that were part of finance at the time of borrowing but will be paid in the end.
Finance Charge: It is the total cost of auto loan that includes interest, all kind of fees, as well as credit checks. The finance charge is the total amount of fees along with the interest charged for the loan.
Total Payments: it is the total sum of car finance amount and the finance charged for the purpose.
Payment Schedule: It is the total amount in numbers, due dates, and installments that are scheduled for the repayment of car loan.
Total Sales Price: It is the total sum of payments scheduled for repayment along with the down payment that is made for the car.
