Buying a new car has always been an achievement to many people. However, the process of shopping one can be stressful for many people. It is essential to understand the terms used while applying for car loans. It makes one more confident about his financial decision. Below are some of the most common terms used while buying a car.
Lender
A lender will be the financial institution where you are borrowing money from. There are other cases where dealers offer financing.
Principal
The term principal means the amount of loan given.
Maturity Date
The date should which the entire loan is paid back in the total amount. Some people also refer to it as the length of the loan. Sometimes a standard car loan usually lasts for 60 months or approximately five years.
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Interest Rate
When you are awarded a certain amount of loan, there is always a percentage charged on the principal amount. There are several ways of calculating the interest of the loan.