Finance Common Terms in Peru, IL

 

Buying a vehicle can be a difficult process by itself. However, the process becomes even more difficult when people throw in terms you may not be familiar with. Here at Coronet Dodge Chrysler Jeep Ram Fiat, we are not here to trick you, we are here to help. Below, you'll find some of the most common terms related to car financing you might hear in our finance department.

Annual Percentage Rate (APR)

When you obtain a loan, you are using someone else's money (the bank's) to buy something (a vehicle). For that privilege, the bank charges you a percentage of that loan amount annually.

Dealer Incentives

These begin as discounts offered by manufacturers to dealers that are passed on to the buyer.

Early Termination Fee

Every lease agreement comes with an agreed-upon term. If a person wishes to end the lease before the term, they must pay a fee.

Excess-Wear Charge

With leases come certain restrictions, one of which defines a normal level of wear and tear. Exceed that level and you will incur charges.

Mileage Limit/Allowance

Lease agreements often include a mileage allowance, which is the number of miles you are permitted to drive per year. Exceed that limit and you will have to pay a charge.

MSRP

This stands for Manufacturer Suggested Retail Price, the price at which the manufacturer recommends the dealer sell the vehicle.

Residual Value

What a vehicle's value will be at the end of a lease, this estimate is called the residual value. According to most lease agreements, it is used to calculate monthly payments and it is the price at which the lessee can purchase the vehicle at the end of the term.