Buying a car is an exciting prospect, but with a number of options to consider, it can also be stressful.
You'll likely have an idea of what model and size you're looking for and maybe even thought about financing it too. But when it comes to car finance there are a lot of different terms and phrases - do you know what they all mean?
Here are common terms you need to know:
APR (Annual Percentage Rate)
The APR is the interest you will be paying on a loan as well as any other charges you may pay, such as an arrangement fee - this will vary by lender. This will give you an idea of what the cost of the loan is over the year - it's a good idea to work this out as a cash figure to understand how much interest you're actually paying.
GAP (Guaranteed Asset Protection) insurance
GAP insurance goes alongside comprehensive car insurance and is designed to cover you if your car is stolen or written off. In this kind of unfortunate event this type of policy will pay the original purchase price or replacement cost of the vehicle (whichever amount is higher). There are a variety of options available when it comes to GAP insurance, so it's worth carrying out further research.
A balloon payment is a lump sum figure associated with a loan. This figure will be payable at the end of the payment term. Selecting a balloon payment means that your monthly payments will be lower, this kind of payment is usually found in hire purchase agreements.
Whatever you decide to do and whether you choose to take out a loan to finance your car or not, these three terms are important to consider and understand when investigating your options.
We're car finance specialists - come and speak to our experts
As Specialist Automotive Finance approved experts, our team based here in the West Midlands can help you get the best finance deal on your new vehicle. Give us a call on: 01384 411119 or drop by our Cradley Heath showroom.