Are you interested in getting a new Chevrolet vehicle like the 2020 Chevy Equinox? Has one of our used Chevrolet cars caught your eye? In either case, you may want to finance at least part of your purchase.
When you finance an automobile, you might hear words that you’re not overly familiar with. Because it’s important to understand what’s happening when you finance a car, we thought it would be a good idea to explain what some of those terms mean.
- Down payment: A down payment is the amount of money you’ll pay out of pocket when you purchase or lease an automobile.
- Equity: When you finance a car, you’ll build equity as you pay off your loan. Equity is the difference between what you owe on your vehicle and your automobile’s current market value. If you lease a car, you will never build equity in your ride because you’re basically renting your vehicle for a set number of months.
- Upside down loan: If you’re upside down on your auto loan, it means your outstanding loan balance is greater than your car’s market value. Many motorists are upside down on their loan for the first few years when vehicles typically experience rapid depreciation.
- Depreciation: This is a fancy term that’s used to describe the value an automobile loses over time. Cars usually depreciate slower after the first few years they’re privately owned.
- Principal: The principal is the amount you owe on your vehicle before interest is factored into the equation.
If you have a question about a term that’s not discussed above, contact one of our dealers at Lester Glenn Chevrolet of Freehold or visit our convenient location to talk to our finance experts today.