Common Auto Finance Terms | Greenville SC | Near Spartanburg, Greer, Anderson & Easley

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Common Finance Terms Explained in Greenville, SC

When buying a vehicle, it’s easy to feel intimidated by the financing process, but don’t worry: Big ‘O’ is here to help! Creating a payment plan for your car is easy when you sit down with a member of our finance team, but to help you feel even more prepared, we’ve compiled a list of terms you may hear when financing your new Dodge, Chrysler, Jeep or RAM. Whether you’re a first-time car buyer or you just need to refresh your memory, we recommend checking out the definitions below.

Financing

When you finance a vehicle, you pay for it over time rather than paying the full cost in cash at the dealership. Typically, you pay a set amount each month for a few years until the car is paid off in full. To help you decide how much to pay each month, we offer a payment calculator that can help you estimate your monthly payments.

Leasing

Leasing a vehicle is like leasing an apartment: You’re renting it for a period of time, usually 24-36 months. When the lease ends, you can return the vehicle or buy it. Keep in mind that your lease payments do not go toward the cost of purchasing the vehicle.

Term

The term is the period of time a loan or lease will last.

Principal

The principal is the main amount of the loan you’re paying off. Interest and other fees are not included.

Down Payment

When you purchase or lease a vehicle, the down payment is the amount of money you pay upfront. The amount will vary based on your credit history, the terms of your agreement and other factors.

Interest

When you borrow money, the lender charges you an amount of money known as interest as the “cost” for borrowing.

Cash Back

Vehicle manufacturers often offer cash back as an incentive to buy a new car. You may also hear this money referred to as a “rebate,” and you can either use it towards the down payment on your vehicle or receive it as a check in the mail.

Trade-in

If you trade in your old car, you can apply its value towards the cost of your next purchase or lease. Trading in is a great way to save money when you need to upgrade your vehicle.

Depreciation

Depreciation occurs as a vehicle loses its original value over time. As soon as a new vehicle is driven off the dealer’s lot, it begins to depreciate, and it continues to lose value throughout the rest of its lifespan.

Equity

Equity is how much of your car you own, in contrast to how much the bank still owns. Equity is calculated as the difference between the value of your car and how much you still owe on it. For example, if your vehicle is worth $30,000 and you still owe $10,000 on it, you have $20,000 in equity. When you pay off your loan, you have 100% equity in your vehicle.

Upside Down

When you’re upside down on your loan, the market value of your vehicle is less than what you owe. Essentially, you owe more on your car than what it’s worth. It’s also known as having negative equity.

If you have questions about our finance process, or if we can help clear up any of these or other financial terms that you don't understand, please let us know. Give us a call, contact us online or stop by Big 'O' Dodge Chrysler Jeep RAM at 2645 Laurens Road, Greenville, SC 29607, near Spartanburg, Greer, Anderson and Easley. We look forward to chatting with you!