When you go to the dealer lot expecting to finance one of the used cars, you may get lost in the sea of financing jargon. If you know some basic terms, you can understand what the sales representative is telling you so you feel better about your purchase. Here are some auto financing terms you should know when financing your used car.
APR: This is an abbreviation for Annual Percentage Rate and it refers to the actual interest rate multiplied by the number of billing periods in one year. For example, if your actual interest rate was 4 percent per quarter, your APR would be 16 percent. Although this helps compare purchases, be sure you know about other fees before making your final decision.
DMV Fees: Before you drive your used car away from the dealer, you have to register it and get license plates. These fees may also be called title and license fees and they are a percentage of the cost of the car.
Term: The term is the length of your car loan and it is usually given in months. Most car loan terms are 36, 48 or 60 months, but your term could be different based on your individual situation.
Now that you know some financing terms, head down to your used car dealer and negotiate a sweet deal on your next vehicle!