It’s not uncommon for people to ask us what certain things mean when we discuss financing with them. As your local Ford dealers serving Jersey City, NJ and surrounding areas, we’re always happy to explain the meaning of finance terms. It’s important for you to have a firm understanding of your loan or lease agreement before you sign your contract, so please ask us for clarification if you’re unsure about something.
Here are some financing terms we’re asked about a lot and an explanation of each one:
Financing: When you finance a vehicle, you’ll take out a loan to complete your purchase. When you pay off your auto loan, you’ll own your car outright.
Leasing: A lease agreement is akin to a long-term rental agreement. When your lease expires, you’ll return your automobile to our Rutherford, NJ Ford dealership.
Equity: This term refers to the difference between your loan balance and the current value of your car. Making monthly payments on your loan allows you to build equity. No matter how long you make monthly lease payments, you will not build equity in a leased automobile.
Interest rate: Even if it’s zero, every car loan will have an interest rate which is typically expressed as APR or an annual percentage rate. The interest you’ll pay is basically a fee your lender collects for having loaned you money.
Down payment: A down payment is the amount you’ll pay out-of-pocket when you purchase or lease an automobile.
Term: The term is the length of time your loan will remain in force.
Do you have a question about a financing term that’s not discussed in this blog post? If so, contact Quality Auto Mall or visit our convenient location to talk to our finance experts today.