Common Automobile Loan Clculator Terms You Should Know

You’ve heard it all before. Somebody always seems to want to get out of the car loan they just took because they found a better deal. So do your homework! Use an automobile loan calculator and find out the best car funding amortization plan that suits your budget and car preference. Is unfamiliarity with loan terms setting you back? We’ve compiled some of the most common auto loan financing terms to set you on your way.

1.      APR – Annual Percentage Rate; the yearly cost of your car loan, including interest, insurance, and the origination fee.

2.      amortization – this is the continuous elimination of a liability (e.g., car loan) via regular payments made over a specified period of time.

3.      down payment – cash you have in hand to serve as an up front payment for the vehicle. The amount will be deducted from the vehicle car price thereby reducing the amount of the auto loan.

4.      residual value - the estimated market value of a vehicle at the end of the lease, used to calculate the cost of the lease at the time of negotiation.

5.      trade-in value – the current price or value of your existing vehicle; this amount will be deducted from the price of the car you want to get a loan for if you present this as part of the deal.

6.      interest rate - the fee charged by the lender financing your loan for the use of his/her money, usually expressed as an annual percentage of the principal amount

Written by: Katrina Marion

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