Buying your next car can be challenging. Whether it’s new or just new to you, the next ride you own might only happen once you set foot on a seller’s lot. That can mean hearing a whole different lingo than you usually use. Even buying privately or online can involve a lot of unfamiliar terms or words you recognize but need to learn the whole meaning of. Fortunately, the following are some terms you should know and can learn before you go car shopping.
APR
APR stands for annual percentage rate. This particular car-buying term relates to the financing terms of your car loan. An APR might also be called a finance rate, the interest rate on any car loan you use to finance your vehicle purchase. Your lender will charge an annual percentage of the money you borrow, which becomes their profit for lending to you.
Down Payment
A down payment is an upfront amount of cash you pay to lower the total loan amount, and your monthly payments consequently drop, too. Buyers with higher credit scores can get lower down payments and might not need them.
Drive Off
You must pay this overall amount before driving off with the car. More than the down payment, it can also include the title fee, sales tax, and document fees.
Extended Warranty
New cars should have a factory warranty, but the dealer might offer a service contract that covers services and repairs beyond factory coverage. These contracts have high-profit margins for dealers.
Gap Insurance
A car’s value can depreciate significantly once driven off the dealer’s lot. Gap insurance makes up the difference if the vehicle is totaled or stolen early in its ownership or lease.
Test Drive
Customers should be able to take a car or vehicle out for a short drive to see how it suits their driving needs and individual comfort.
Title
A vehicle title is proof of ownership, and it changes hands when a car is bought or sold. The Department of Motor Vehicles in your state issues these, and it’s important to keep this in a secure place after you receive it.
Trade-In
Your previous vehicle might have value to a dealer that lowers the price of the new car you are trying to buy. It doesn’t hurt to research the trade-in value of your current vehicle at multiple dealerships or places so you are certain you are receiving the best deal.
VIN
Every vehicle should have a unique vehicle identification number. Typically 17 digits, these numbers have codes for the vehicle’s make, year, body style, and engine, either inside the door frame or under the windshield. You might need the VIN to look up a used vehicle’s car history report and ensure the car value is accurate.
Use This Knowledge
Aside from buying a home, purchasing a car, truck, van, or SUV can be the most significant thing you’ll ever spend money on. When you know the right car-buying vocabulary, you’ll understand some of the key terms you’ll hear in the process. Knowing the car sale jargon you get hit with means you can confidently walk on the car lot and drive away with a good deal.
Published by: Holy Minoza
