Even if you’ve been driving for a little while, taking the step of buying your first car is likely to throw out some terminology you haven’t come across before. Decoding the meaning of a few acronyms and phrases can help create a positive experience around your next auto purchase.
Here are a few terms to be aware of when purchasing a vehicle, particularly if you plan on financing it with an auto loan.
MSRP or Sticker Price: Short for Manufacturers Suggested Retail Price, this is the suggested price for a vehicle at a dealership. There may be an opportunity to negotiate down from here toward the factory invoice price, which is what the dealer paid the automaker for the vehicle.
Pre-approved Loans: These are auto loan approvals that have been obtained before shopping for a car. If approved by multiple lenders, you can select the best option and, once at the dealership, focus on negotiating the price of the car. You can apply for pre-approval at in-house finance institutions like Volkswagen Financial Services.
Co-signer: A creditworthy individual – such as a parent, relative or close friend – who can help a subprime borrower quality for an auto loan. They can also help a qualifying borrower obtain a better term or interest rate. But a co-signer is also responsible for monthly payments, or repayment of the full loan amount, if the borrower defaults.
Co-borrower: An individual who enters into a joint auto loan agreement with the original borrower. They share the equal responsibility for repaying the loan and have the same rights to the use and ownership of the vehicle as the other borrower. A co-borrower, sometimes called a co-applicant, may also improve the chances of approval and, if approved, the loan terms.
Auto Finance Calculators: Typically available online, auto-finance calculators help consumers budget for a vehicle purchase. Users estimate what they may be able to afford in total, as a monthly payment, and what potential interest charges would be, for example - https://emi-calculator.vwfsindia.co.in/
Add-ons: Optional extras that may be offered by a dealership after you’ve settled the price of a car. These can include products like an annual maintenance or a service contract, which cost extra.
Documentation Fee: Charges intended to cover the cost of processing the paperwork involved in the sale of a car.
Down Payment: Amount paid upfront by a borrower to reduce the amount financed in a loan.
Extended Warranty: It is an agreement to cover certain specific service and repairs beyond the life of the factory warranty.
Motor Insurance: Insurance for cars, its primary use is to provide financial protection against physical damage resulting from any unforeseen circumstances.