Some Auto Finance Terms to Know

At Bowman Commercial, we want you to know about the various terms that you may see while negotiating an auto loan. For instance, you will likely see the words term, interest rate and trade allowance. The term of a loan is another way of saying how long it is.

If a loan has a term of 60 months, it will be paid over a period of five years. The interest rate or finance charge is the portion of each payment that goes directly to the lender. Interest payments compensate a lender for the risk that they take in extending credit to a borrower.

A trade allowance is a credit that you are given toward the purchase of your vehicle. This is generally deducted from the price before sales or other taxes are calculated. Trade values are determined by many factors such as the quality of the car.

 

 

Categories: Finance