When you buy a vehicle, it's easy to get overwhelmed by financial jargon. Here's a quick and easy guide to the terms you're most likely to encounter when buying a car.

APR stands for Annual Percentage Rate. It refers to the price you pay each year for the privilege of borrowing money. The higher the APR, the more you pay throughout the life of the loan. 

The balance is the amount of the loan that needs to be repaid. Every time you make a payment, the balance goes down.

Credit refers to your ability to borrow money. If you have good credit, lending institutions will gladly lend you money.

Down Payment
When you finance a car at a dealership, you will typically make a down payment. This payment is credited against the balance. For example, if you buy a $20,000 vehicle and make a $3,000 down payment, the balance will be $17,000.

When you finance a car, it means you're borrowing money to pay for it. That means the lending institution owns it until you make the last payment. If you don't want to finance, you can pay for a vehicle outright with cash.

Interest is the lending institution's fee for borrowing money. It's charged as a percentage of the amount you borrowed.

If you lease a car, you'll pay a monthly fee to use it. During a lease, you'll have to keep the car in good condition and below a certain mileage. If you've taken good care of it, you'll return the vehicle at the end of the lease and owe nothing more on it. 

The term is the length of the loan, typically expressed in months. Leases usually last 36, 48 or 60 months.

Have more questions about financing your next vehicle? Visit our finance department at LaSorsa Chevrolet Buick.