Common Auto Finance Terms
Common Finance Terms Explained in Lafayette, LA
Here at Giles Subaru, we make auto financing easy and stress-free. There’s no need to feel nervous, even if it’s your first time buying a car. When you visit our finance center, our experts will work with you to craft a financing or leasing plan that fits your needs, explaining each step so you stay in-the-know throughout the process. To help you prepare, we’ve compiled a list of common finance terms that you may hear during your visit to our dealership. If you’re new to financing or it’s just been a while, take a look to familiarize yourself with these phrases so you can feel fully confident and ready to sign on the dotted line for your new Subaru or used vehicle.
Financing
When you finance a vehicle, you pay for it over time instead of paying for it in cash at signing. Typically, you will make monthly payments for a few years. Once you pay off the car in full, you’ll own the vehicle.
Leasing
Leasing differs from financing in that you won’t own the vehicle at the end of your lease. In effect, you pay to rent the car for a period of time (usually 24-36 months). Once your lease term ends, you can return the model to the dealership or buy it outright.
Term
A term is the length of time a lease or loan lasts.
Principal
The principal is the amount of your loan you’re paying off over time. Interest isn’t included in the principal.
Down Payment
Once you’re ready to purchase or lease a vehicle, you will make a down payment at signing. This is an amount of money you pay upfront (and which offsets the amount you have left to pay on your loan or lease). Your down payment total will depend on your credit history, the terms you agree to and your cash on hand.
Interest
When you get a loan, the lender will charge you an amount of money (known as interest) which is essentially the cost of borrowing money from them.
Cash Back
Vehicle manufacturers offer cash back as an incentive to buy a new vehicle. You may also hear of cash back referred to as a rebate. You can apply your cash back toward your down payment, or you can receive it as a check.
Trade-in
You can save on your purchase by trading in your current ride. Find your vehicle’s value on our website today! We’ll make you an offer for your old car which you can apply to offset the cost of your new one. Plus, we offer the Subaru Guaranteed Trade-in Program and the Trade Up Advantage Program , which you’ll benefit from if you’re trading in one Subaru for another.
Depreciation
A vehicle’s depreciation is its loss of value over time. Depreciation starts as soon as a model is driven off a dealer’s lot and continues as long as the vehicle is being driven.
Equity
Equity is the difference between how much you owe on your car loan and your vehicle’s value. If your model is worth $10,000 and you owe $5,000 on it, you have $5,000 in equity.
Upside Down
When you’re upside down on your loan, you owe more on the vehicle than it is worth. This is also known as having negative equity. For example, if you owe $10,000 on your car but it’s only worth $8,000, you’re upside down.
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 Giles Subaru at 100 Town Center Parkway, Lafayette, LA, 70503, near New Iberia, Abbeville, Youngsville and Broussard. We look forward to chatting with you!
