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