Finance Terms to Familiarize Yourself With

A new car purchase is a great way to make a dramatic change to your life, especially as part of a New Year’s resolution. When you’re ready to purchase a new or pre-owned car, our finance center near West Union, IA can provide assistance.

Knowing what certain finance terms mean will help you understand the terms and conditions when you’re ready to buy. Here are some terms you may encounter.

Annual Percentage Rate (APR)

People tend to confuse the term “APR” for the interest rate. The former encompasses the interest rate but also other cost factors associated with your loan. As such, APR will normally be higher than the interest rate and provide a clearer view of your monthly payment overall.

Acquisition Fee

There is normally a fee charged by the dealership for initiating a loan or lease. This fee foots the cost that goes into checking your credit report, verifying your insurance, etc. The acquisition fee also goes by other terms, such as administration fee or assignment fee.

Balloon Loan

Your loan options may include a balloon loan. With this loan type, monthly payments only include a portion of the vehicle’s cost. Towards the end of the term, you will need one or several large payments to cover the remaining balance.

Lessor

If you’re getting financial assistance for a lease, the lessor is the finance company (usually a bank or credit union) that provides the loan and you make repayments to.

Pre-Qualification

Pre-qualification is when the dealership confirms your eligibility for a loan before you formally accept it. This is also known as pre-approval.

Visit Brown’s Elkader Chevrolet Buick to view models like the Chevy Equinox and more. Our finance center will be more than happy to assist you if there are any financing terms or issues you’re unclear about.