Common Auto Finance Terms
Financing is a great option for many drivers because it allows them to purchase their vehicle over time, rather than paying for it outright. And when it comes to financing a car — whether it's a new Toyota or used vehicle — there are plenty of options for you to consider. We want to make sure you feel comfortable with all the choices available to you so that you can find the perfect plan. If you're ready to apply for financing, come see us at Toyota of Hopkinsville! A member of our team will sit down with you and discuss all the details. Then we'll help you find the best plan that fits your needs and budget. In the meantime, familiarize yourself with these terms below so that when the time comes, you can be confident in your choices!
Financing
If you're looking to buy a car, but don't want to pay in cash, financing could be the right choice for you. Financing allows you to pay for your car over time — typically with monthly payments spread out over several years. When the car loan is paid off, you will own the vehicle outright!
Leasing
Leasing is a great option for customers who are looking for flexibility when it comes to vehicle ownership. When you lease a vehicle, you're essentially paying to rent it for a set period of time (usually 24-36 months). At the end of your lease, you can either return the vehicle or buy it.
Term
Term means the length of time for a loan or lease.
Principal
Principal is the amount of the loan that you are paying off. This does not include interest.
Down Payment
When you're ready to get a car, your down payment is the amount of money you'll pay up front. It's part of your vehicle's purchase price. You might also hear this called a "deposit."
Interest
Interest is the amount of money that the lender charges you for borrowing money.
Cash Back
Cash back on a car offer is exactly what it sounds like. When you buy a car, you might be eligible to receive cash back on your new or used vehicle purchase or lease. You can use it either towards the down payment or receive it as a check.
Trade-in
When it's time to get a new or used vehicle, trading in your old car can help lower the cost of your new vehicle by applying its value to your purchase or lease.
Depreciation
Vehicle depreciation is the gradual loss of a vehicle's original value. The process of depreciation begins when the vehicle is purchased and continues as long as the vehicle is in use. When you buy a new car, it loses value as soon as you drive it off the lot.
Equity
Equity is the difference between your vehicle's value and how much you still owe on it. For example, if your vehicle is worth $20,000 and you still owe $5,000 on it, you have $15,000 in equity.
Upside Down
Being upside down on your auto loan happens when you owe more on your vehicle than the market value of that model. It’s also known as having negative equity in your car.
If you have questions about our finance process, or if we can help clear up any of these or other financial terms that you don't understand, please let us know. Give us a call, contact us online or stop by Toyota of Hopkinsville at 4395 Fort Campbell Blvd., Hopkinsville, KY 42240 , near Fort Campbell, Madisonville, Russellville and Western Kentucky. We look forward to chatting with you!
