Finance Terms Explained | Tallahassee FL
Finance Terms Explained in Tallahassee, FL
Financing your new vehicle seems to be the norm these days, while paying in cash is making its way out the door. And while you might be worried about what used cars are going for in today’s world, prices are low enough that many customers can buy without even having to finance! Are you a first-time buyer and nervous about the financing process? Do you know if you’re in good financial standing or if you have good credit? If not, the team here at Tallahassee Ford is here to guide you along the way. We know that because of the considerable amount of financial requirements, credit scores and general options for financing, your head might be spinning. Our finance department is dedicated to helping you through the process and giving you the chance to find the sedan, truck or SUV you’ve been looking for. Because we’re always looking to relieve our customers of the stress or anxiety they might be feeling, we’ve compiled a number of financial terms below to help you get familiar with the experience.
Principal
This is the amount of the loan (not including interest) that you are paying off.
Down Payment
When you decide to purchase or lease your new model, the down payment will be the money you pay upfront. Once you’ve decided on your model, the amount you pay upfront will be based upon things like your credit score and the terms of your agreement.
Interest
The amount of money that the lender charges you for borrowing money is called interest. This can also be categorized as a fee for taking out a loan.
Cash Back
When you’re looking for a new vehicle, you might be incentivized to buy because of cash back being offered to you at purchase. While it can also be called a rebate, customers can put the amount towards their new purchase or receive a check for a certain amount.
Trade-in
If you’ve decided that you’re going to buy a new vehicle, trading in your current model is a great way to help lower the cost of your new purchase.
Depreciation
This is when your vehicle loses value, and the process begins the moment your vehicle is purchased.
Equity
The difference between your vehicle’s current value and the money you still owe on it is called equity. If your vehicle is valued at $20,000 and you only owe $5,000 on it, $15,000 is how much you have in equity.
Upside Down
The other side of equity is negative equity, sometimes known as being “upside down.” This is when you owe more on your car than what it is currently valued at.
Customer Account