Finance Terms You Should Know

Odds are if you've ever bought a car, then you've come across an array of terms that seem totally foreign. We've put together a list of basic terms to help you better understand automotive financing.

    • Add-on Interest: This is calculated at the beginning of the loan and then added to the principal. If you pay off early, you still owe interest you would have accumulated.
    • Amortization: Fancy word for any loan with regular payments.
    • Blue Book: The fair market price, including wholesale and retail estimates.
    • Co-signer: Someone who signs the loan paperwork with you, agreeing to pay the debt you owe if you should fail to pay

    •    Rebate: An incentive which lowers the price. It is given to people with bad credit, first-time buyers, and even eco-friendly vehicles.
    •    Trade-in value: Value of your current vehicle, usually taken off the sticker price of the car you are looking to buy.
    •    Upside Down/"Underwater": Owing more than the value of your car - usually caused by low monthly payments and rapid depreciation.
    • Variable Interest Rate: Fluctuates with the current rate index, meaning you could owe slightly more or less than initially expected

Buying or leasing a car is one of the biggest financial decisions many people make in their lives. Unfortunately, it can sometimes get bogged down in technical jargon. At Parks Select we want everyone to be on an equal playing field. So before you show up at the dealership, here are a few common finance terms you should know about:
• APR - Short for "annual percentage rate," APR is the cost of credit when expressed at a yearly rate, which can be negotiated.
• Credit Report - The document that expresses your financial situation and past. This does not include your credit score, though it is somewhat related.
• Down Payment - The amount of money you pay up front to help reduce the amount you finance.
• Lease - An arrangement in which the leaser agrees to pay a certain amount every month for a specified period of time, after which they will return the vehicle to the dealership. Cheaper than buying a car, but with limitations. • Mileage Limit - The annual mileage limit for a leased vehicle.
•    Repossession - When your vehicle is taken back from you after missing too many payments.