When you finance a car for the first time, the salespeople may use some lingo you may not be familiar with, or have heard but don't entirely understand. Here’s an easy guide to these terms so you can keep up and make an informed decision.
MSRP: This is the manufacturer’s suggested retail price, but it won’t necessarily be the sticker price of the vehicle or what you pay in the end thanks to added accessories or sales. Loan term: This is the length of your loan, which usually ranges from 48 months to 84 months. Longer terms mean lower payments but more interest in the long run. Long-term loans are more difficult to qualify for and require longer credit history. APR: Annual percentage rate, or interest rate. This determines how much interest will be added to your payment every year, so the lower it is, the better. The APR you qualify for is affected by credit score, loan term, and MSRP. Down payment: A down payment of a few thousand dollars is often helpful in qualifying for a loan and reduces monthly payments.
Generally, remember that there are additional fees like DMV fees (registration, new plates, etc.) and sales tax that will affect what you spend overall.