Volvo Finance Terms You Should Know

 

If it's been a while since you purchased or leased an automobile, you may want to touch base with the pros in our Volvo finance center to brush up on Volvo finance. As you shop for a vehicle, you may overhear financial jargon you're not familiar with, which is why we've put together a list of terms you should know. If you have a question about a term that's not on the following list, don't hesitate to contact Volvo Cars Auburn.

MSRP

This abbreviation is shorthand for manufacturer's suggested retail price. MSRP refers to the price at which a manufacturer recommends a dealer sells a given vehicle. This price is just a suggestion, so a dealer doesn't necessarily have to abide by the carmaker's recommendation.

Principal

If you're going to finance one of our new Volvo vehicles or a pre-owned model, you'll borrow money from one of our trusted lenders. The amount you borrow is your principal. Every monthly payment you make will drive down the principal you owe, although a portion of your payments will cover interest charges unless your loan has a zero percent interest rate.

Equity

As you pay down your principal, the equity you have in your car will grow. Equity is the difference between your principal and the value of your vehicle.

Negative Equity

Drivers who owe more than what their car is worth have negative equity in their automobile, which means they're "underwater" or "upside down" on their loan. Motorists who roll over a loan balance into a subsequent loan are often at risk of being upside down if their previous loan had a large outstanding balance.

Term

In the context of financing, term refers to the length of time your auto loan or lease contract will last. The average length of a lease is 36 months while the most common term for a car loan is 72 months. 

Depreciation

Whether you get a pre-owned car or a new Volvo model, your automobile will lose value over time. That loss of value is referred to as depreciation. In general, new cars depreciate faster than older ones. Vehicles that are considered vintage, classic, and/or collectible often defy the odds and gain value as they age.

Gain More Volvo Finance Knowledge at Volvo Cars Auburn

Would you like to learn more about Volvo financing options? Head over to our Auburn, MA Volvo dealership so we can answer all the questions you have about financing today. We look forward to helping you!