Common Auto Finance Terms
Common Finance Terms Explained in Eugene, OR
We make financing easy and stress-free here at Volkswagen Eugene! We know that the process can be intimidating for first-time buyers and experienced shoppers alike, which is why we’re here to help our customers every step of the way. To prepare for your visit to our finance department, take a look at our list of commonly used terms below. You may hear these terms when talking with our friendly finance experts, and whether they’re new to you or you just need a refresher, we hope our breakdown helps you feel ready to sign on the dotted line for your new Volkswagen or pre-owned car.
Financing
When you finance a car, you pay for it over time, making monthly payments with interest. After several years of payments, you will own the car in full.
Leasing
Leasing is more like renting, in that you’re paying to drive a vehicle for a set period (usually two to three years). Once your lease ends, you can purchase the vehicle if you’d like, or you can simply return it to the dealership.
Term
A term is the length of time a loan or lease lasts.
Principal
The principal is the amount you’re paying off on your loan or lease, without interest included.
Down Payment
A down payment is money paid upfront at the start of a loan or lease. The amount of your down payment will depend on a variety of factors, such as your credit history and your loan or lease’s terms.
Interest
Interest is the money charged by a lender as the cost of borrowing money. You’ll see it represented as a percentage of the total amount borrowed.
Cash Back
Manufacturers offer cash back as an incentive to buy a new car. You might hear cash back referred to as a rebate.
Trade-in
When you’re ready to upgrade to a new (or new-to-you) vehicle, you can save on your purchase by trading in your old car. Find your trade-in value on our website today!
Depreciation
Depreciation refers to a vehicle’s loss of value over time. This process begins as soon as a new model is driven off the dealer’s lot, and it continues throughout the vehicle’s lifespan.
Equity
The difference between your car’s value and how much you owe on it is your equity. Here’s an example: If your car is worth $20,000 and you owe $5,000 on it, you have $15,000 worth of equity in your vehicle.
Upside Down
Also known as having negative equity, being “upside down” happens when you owe more on your vehicle than it is worth. So, for example, if your car is worth $10,000 but you owe $15,000 on it, you’re upside down on your loan.
If you have questions about our finance process, or if we can help clear up any of these or other financial terms that you don’t understand, please let us know. Give us a call, contact us online or stop by Volkswagen Eugene at 89320 N. Game Farm Rd., Eugene, OR 97408 , near Springfield, Salem, Roseburg and Albany. We look forward to chatting with you!