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Beaman Toyota in Downtown Nashville – Common Finance Terms
There are plenty of important things to know before you head off to your local dealership to shop for a new car. While having a basic automotive vocabulary is important, know some of the most common finance terms could save you from a bad deal. Need to freshen up? Here’s a quick list of several of the most common finance terms.
APR – Also known as the annual percentage interest rate or finance rate, the APR is the annual fee a lender charges for the loan expressed as a percentage. Lower credit scores will likely have a higher APR while higher credit scores will have the lowest APR.
Down Payment – This is basically the amount the borrower pays up front in order to reduce the amount needed in a loan. A large down payment will reduce your monthly payments but could be lost if the vehicle is destroyed or stolen.
Gap Insurance – In the event your car is stolen or destroyed, gap insurance pays the difference between the vehicle’s current value and the remaining amount of the loan. If the vehicle is destroyed or stolen, the owner will have to make up the difference between the total loan amount and what gap insurance covers.