Car Loan Finance Terms You Should Know
The world of car loan financing can sometimes be a conceiving one, particularly if you hear words and finance terms that mean nothing to the ordinary customer who only buys and financed a vehicle every few years. When the banks or dealers go over the car financing with the consumer, they may get confused. Prepare yourself for you next car loan financing by knowing the bank and dealers vocabulary beforehand. That way more people, including you, can take better car loan financing for their individual situation and ensure you are getting the best deal possible for you.
* The Principal Balance: the amount of funds you borrow from the finance company. That does not include the cost of your financing or interest charges. It includes the price of the vehicle, sales tax, license fees and any aftermarket or back end products you may have purchased like an extended warranty.
* Down Payment: how much you pay up-front for the vehicle, typically 10% to 20% of the vehicle’s negotiated price. This amount is deducted from the Principle Balance you finance.
* Finance term: the length of the loan, typically up to five years, but can range to eight years nowadays.
* Finance Charges or Interest Rate: a percentage paid by the customer to the bank for the financing of the vehicle. The longer you get to pay back the bank, the more you will pay in finance charges.
Before applying for your car loan financing, make yourself a budget. There are several advantages to making and sticking to a budget. Firstly, most people have set financial goals that they would like to reach in the future. Sometimes it may be a trip, a brand new car, or a college education. A budget can assist people save cash to make these goals a reality. Additionally, almost all people are crushed under heavy borrower debt. Without a disciplined pattern of spending, it is virtually impossible to make much headway in reducing debt. A personal budget will assist the necessary framework to start eliminating these inflated account balances.
For more finance terms and other information about getting the best deal on your next car loan or refinance car loan, go online to OpenRoad Lending. We want you to feel comfortable conversing with the lending institution, and speak fluently in “lender talk.” At OpenRoad Lending, we ensure that our customers know exactly what is going on, what to expect throughout the car financing process, and what we offer in the most simplest of car loan finance terms.