1. Interest
When you choose to partner with a bank or credit union, the loan you agree to will have interest, or a certain amount of money you'll need to pay on the loan amount in order to participate in the partnership.
Interest is often expressed by a monthly percentage on the loan value, known as an interest rate. The higher your interest rate, the more money you have to pay on the loan's value.
2. APR
APR, or Annual Percentage Rate, is another interest-related financing term that's woven into the nature of getting a car loan. This is the amount of interest you pay over the course of a year, based on your loan amount, as compared to the monthly interest rate.
3. Credit
Credit is another key term to understand when applying for an auto loan. Your credit score is a number between 300 and 850, determined by your credit history and used in order to predict your likeliness to repay borrowed money (ie. an auto loan, rent on an apartment, etc.) in the future.
The higher your credit score, the better rates you can expect (you're less of a risk and more likely to repay the lender). As a first step, go ahead and get your free credit report from AnnualCreditReport.com.
If you know that your credit history is a bit rocky, you still have options! Make active changes to stay on top of your current payments and partner with a financing team with experience securing no or bad credit car loans for its customers.
4. Down Payment
A down payment is the amount of money a car buyer chooses to pay at the time of signing and the start of a financing agreement. Typically, the higher the down payment you make, the smaller your monthly loan payments will be.
5. Trade-In Value
If you'll no longer need the vehicle you're driving now that you have your new car, trading it in to the dealership is a good way to further decrease the amount you owe on your new vehicle.
A car's trade-in value is the amount you can get from the dealership that may be applied as payment toward your new car. Some dealerships may offer a trade-in value estimator tool, so you can more accurately understand what you can afford and how you will afford it.
Take The Next Step Toward Car Ownership
Auto financing is really all about balance: finding the terms that fit your current financial situation and helping to support your plans for the future, too. We hope your newfound knowledge of auto loan terminology serves you well! And if you need a car loan partner in Mount Pocono, Tobyhanna, Scranton, Stroudsburg and East Stroudsburg to take you through the process, Ray Price Chevrolet is happy to help!
We have dozens of new Chevy sedans, SUVs, and trucks in stock. Plus, a great selection of gently used cars from many popular makes. Search our inventories by monthly payment and when you've found a few options you like, securely and quickly apply for financing online.
We're located right in the heart of Mount Pocono, just a few minutes from the Stroudsburg and Blakeslee areas.
