Buying a car can be mystifying, and the sometimes confusing process can make it feel like the sales procedure is adversarial. In fact, it may sometimes feel like the sales department is speaking another language … but it doesn’t have to be that way. The next time you’re ready to buy a new (or new-to-you) vehicle, keep in mind that there are car-buying terms that you should know.
Get on the Same Page
It’s important for you and your sales professional be on the same wavelength. With that in mind, let’s go ahead and address one of the things that everyone wonders about: financing. We’ll start with the APR, the Annual Percentage Rate. You might also hear it referred to as the finance rate. Put simply: This is the interest rate on your car loan. On your contract, you might also see the term ‘Acquisition Fee.’ This is a charge that covers the cost of processing a lease (meaning that someone in the finance office has verified your insurance and checked your credit to make sure a lender can extend a loan for the price of the vehicle you want to buy). An APR can also be referred to a money factor, finance costs, or a rent charge, this is the charge for using the lender’s funds to acquire the vehicle.
The Lease of These
Leasing a vehicle can be a great alternative to buying, under the right circumstances. If you’re looking to lease a vehicle, you always want a Closed-End Lease, also known as a walk-away lease. This puts the power to purchase in your hands. You can either buy the vehicle for a set price at the end of the lease, or you can walk away from the deal without liability for any unexpected reductions in the vehicle’s value. Almost all leases offered by car companies and banks are closed-end leases, but it’s always a smart bet to confirm this before signing anything.
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Check out the full list of glossary terms that Car and Driver provides … you’ll gain a lot of information that will help you as you and your sales professional work to find just the right vehicle for you!
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