Car Loan Basics: What You Need to Know

Annual Percentage Rate (APR):

A yearly rate of interest that includes all of the fees and expenses paid to acquire the loan. Lenders must disclose the APR. To compare loans of the same length, you should look at the APR.

Interest Rate:

annual rate of return that the lender receives on the principal of the loan.

Principal:

Amount of the auto loan without the interest factored in.

Down Payment:

Amount of money the borrower puts down towards the purchase of a vehicle at the time of purchase and origination of the loan.

Loan Term:

length of the loan in months. Longer loans have more interest.