Common Dealership Finance Terms Defined - Covington, GA

Financing a vehicle can seem daunting, especially if you've never done it before. But at Ginn CDJR, we're here to help. This quick guide to common finance terms will help you get started in your financing journey. 

APR

APR stands for annual percentage rate, a term that refers to the yearly amount of interest charged on an auto loan.

Balloon Payment

A balloon payment is a plan where monthly payments are lower, but the final payment of the loan ends up being higher.

Cosigner

A cosigner is an individual who agrees to sign on an auto loan in addition to the individual who is taking out the loan. This helps a borrower with minimal or poor credit history to get a better loan deal thanks to the cosigner's more sturdy credit score. The cosigner takes on equal responsibility for the auto loan, so by signing they agree to repay the loan if the borrower defaults on their payments. 

Credit

Credit refers to a person's credit history, which includes information like current and previous sources of credit and payment history. Lenders look at an individual's credit in order to determine whether they have the experience and ability to pay back a loan.

Default

When a person defaults on their loan, they violate the terms of the loan agreement somehow, usually by missing a payment.

Down Payment

The down payment is a payment that the buyer spends towards the total cost of the vehicle up front in order to lower the amount they'll need to have loaned to them.

MSRP

This acronym stands for the Manufacturer's Suggested Retail Price. The MSRP is the base price that is suggested to dealers by the manufacturer itself, and changes with the addition and removal of optional features.

Principal

The principal refers to the total amount that a buyer owes on a car loan, not including interest on the loan.

Refinancing

Refinancing is the act of using a new loan from a new lender to pay off an existing auto loan.

Understanding basic terminology is vital to finding the best car for you at the best price. If you have any questions, come over to Ginn Chrysler Dodge Jeep RAM and talk with a member of our qualified staff.