Shopping for a car can be daunting, especially when you’re confronted with complicated financing terms. That’s why Dan Pfeiffer Plainfield Used Cars has laid out some of the basics when it comes to auto finance.
Add-On Interest – interest calculated at the start of the loan that is added to the principal. This makes it so that even if you pay off your loan early, you still must pay all of the interest.
Base Price – value of a car without any added options.
Blue Book Price – derived from the industry guide Kelley Blue Book, this term refers to a third-party or unbiased price for a car. Most websites offer info for buying and selling prices, letting you know when you’re getting a good deal.
Destination Charge – cost of actually delivering the car from the manufacturer.
Invoice Price – the cost the dealer paid for the car from the manufacturer.
MSRP – This stands for the “Manufacturer Suggested Retail Price,” and often excludes minor fees for destination delivery, registration, etc.
Prepayment Penalty – a charge inferred when you pay off the loan before the end of the term.
Title – a legal document that provides proof of ownership, as well as specific information on the vehicle like mileage, VIN, and more.
Trade-In Value – an amount a dealer will credit you for your old car as partial payment for a new one. This is usually an incentive designed to help both the dealer and the customer.