When you’re shopping for a new car, it can sometimes feel like everyone in the industry is speaking a different language. That’s why we’ve compiled a list of auto finance terms. Whether you simply need to brush up or you’re new to the game, there’s something helpful for everyone. With the right knowledge, you can find the right car at a great value.
APR – An annual percentage rate is the actual yearly cost of funds over the term of a loan, including interest rates as well as any fees.
Blue Book – The Blue Book value, a term derived from the brand Kelley Blue Book, Inc., refers to the value of a vehicle as determined by an unbiased third-party company.
Credit Rating – a numeric score based on your credit history, among other factors. Your credit rating will determine your finance rates.
Lien – this is when a finance company owns the vehicle until the debt has been paid off entirely.
List Price – Also called the MSRP or sticker price, the list price is the value the manufacturer suggests for the retail price of a vehicle.
Pink Slip – a slang term for the vehicle title, the pink slip or title is proof of vehicle ownership (not to be confused with the registration).
Proof of Income – sometimes called the POI, proof of income usually includes paystubs, letters from your employer and bank statements.
Refinancing – You can finance an existing loan with a new lender, especially if you’d like to change your monthly payments, interest, or the term of the loan.
Term – the length of a loan.
Trade-in – a car you can exchange for credit towards your new car. Usually, you can trade your old car in and use that money from the dealership to buy a new car.
Upside-down – to be upside-down on a vehicle means you owe more than the car is worth.
To learn more about affording your next vehicle, visit our finance department at Terry Reid Mitsubishi.