Financing a vehicle can be a confusing and aggravating process, especially if you don’t know what some of the more important terms mean. To that end, here are four of the most important terms in car financing:
These are also often called Title and License fees. After a car is bought at a dealership, it needs to be registered and get license plates, for which you pay a percentage of the car’s purchase price. Consequently, these fees incrementally decrease as the car ages and loses value.
F and I Office:
“F and I” stands for “Finance and Insurance.” The F and I office in a dealership is the center of car payment. This is where you will go once you have settled on a deal for the car so you can sign all the paperwork.
When you finance a car, it just means that you borrowed money to buy it, which you will pay off over time rather than paying for the car all at once up front. Keep in mind that, when you finance a car, the bank or institution that offered you the loan owns the title on the car, which will be yours once you finish the final car payment.
APR stands for Annual Percentage Rate, and is not exactly the same as the interest rate on your car loan. The APR is calculated by taking the interest rate and multiplying it by the number of pay periods in a year—so, for example, if your interest rate is 3% and you pay four times per year, the APR would be 12%.