Financing your new vehicle can be a long and complicated process, but the more you know about the details, the faster and smoother things can become. Here are a few simple definitions to help get you started:
Annual Percentage Rate (APR) is the yearly rate of the cost of credit. You can negotiate this rate, but it is derived from your credit history, market conditions, special offers, and a range of other factors.
A Credit Report is a document that greatly influences your offered APR, as it lays out your bill paying history, your financial details, bankruptcy record, etc.
A Credit Score is a numerical representation of your credit history. An excellent credit score is over 750, good is between 700 - 749, fair is between 650 - 699, and poor credit is anything below 600.
The Down Payment is the initial funds put down that decreases the total amount you finance.
Fixed Rate Financing is when your finance rate stays the same throughout the course of your contract.
Negative Equity is the amount owed on your vehicle over its MSRP. For instance, if you purchase a car for $20,000 and will ultimately pay $22,000 through financing, you have a negative equity of $2,000.
Variable Rate Financing is financing in which the rate varies throughout the course of the contract. This is uncommon when it comes to purchasing vehicles.