Common Finance Terms

Auto Finance Terms in Riverhead, NY

Shopping for a new car can be a daunting task for anyone, especially when you encounter the jargon used during auto financing. At Riverhead Hyundai, our friendly staff will walk you through the steps of buying and financing, providing you with a wealth of information as well as great savings. Feel free to check out this helpful list of commonly used finance terms before you visit us.

When you go to finance your car, it’s a good idea to study the terminology beforehand so you understand everything your salesperson is telling you.

APR: The APR, or Annual Percentage Rate, refers to the yearly rate of interest charged for borrowing money for a car loan. Additionally, it includes fees or added costs associated with the transaction. Understand interest rates and know when a rate is way too high. Interest rates are higher the lower your payment and the longer the term of your loan, so keep this in mind when choosing a loan term. This will also be called the APR. Simple interest loans have a flat interest rate, which is preferable to a graduating interest rate.

Credit Score: A credit score is a numeric rating from 300 to 850 that represents your creditworthiness. In other words, the higher the score, the less of a risk you are for lenders. It’s generally determined by your credit history and the amount of debt you have, among other things. Understand your credit history and what you may be eligible for, and determine whether you’ll need a cosigner who helps you qualify for a loan by agreeing to be partly responsible for payments.

Down Payment: Much like a deposit, a down payment is the amount of money you pay in cash up front. Most drivers should pay about 10 to 20% of the sticker price in cash, in order to achieve lower monthly payments.

Leasing: A lease is a contract between you and a dealership. Essentially, it allows you to borrow a car for a predetermined time and number of miles. Monthly payments are less when you lease, but you don’t get to keep the car when the lease is up.

You should also know the difference between loan lengths . A standard term for a loan is usually around 60 months and comes with reasonable monthly payments. Short-term loans are usually 48 months and have higher payments, but the amount of interest will ultimately be lower. The longest term loans, 72 to 84 months, have the lowest payments with the most interest; these are also the hardest to acquire.

Curious about other financing terms? Call or stop by our finance department today. Our staff is more than happy to explain terms and concepts before you buy.