Common Finance Terms

Common Finance Terms Explained in Hemet, CA

Financing a vehicle with Toyota of Hemet is easy, even if you are a first-time car buyer. There’s no need to feel intimidated by the process when you start the conversation with a member of our team. We want to make sure you feel prepared before you sit down with one of our finance experts. So, we've provided a list of common terms used when financing your new Toyota. If you'd like to familiarize yourself with these terms or just need a refresher, read through the definitions below.

Financing

Instead of paying in cash, financing a vehicle allows you to pay for it over time. You will typically make monthly payments for several years and then own the car outright.

Leasing

When you lease a vehicle, you're essentially paying to rent it for a set period of time, usually 24-36 months. At the end of your lease, you can either return the vehicle or purchase it.

Term

Term means the length of time for a loan or lease.

Principal

Principal is the amount of the loan that you are paying off. This does not include interest.

Down Payment

A down payment is the amount of money that you'll pay upfront on your purchase or lease. The amount of your down payment will vary based on various factors, including your credit history and the terms of your agreement.

Interest

Interest is the amount of money that the lender charges you for borrowing money.

Cash Back

Cash back is an incentive offered by the manufacturer that encourages you to buy a new vehicle. Cash back is often referred to as a rebate, and you can either use it towards the down payment of your vehicle or receive it as a check.

Trade-in

When it's time to get a new or used vehicle, trading in your old car can help lower the cost of your new vehicle by applying its value to your purchase or lease.

Depreciation

Depreciation is the gradual loss of a vehicle's original value. The process of depreciation begins when the vehicle is purchased and continues as long as the vehicle is in use.

Equity

Equity is the difference between your car's value and how much you still owe on it. For example, if your vehicle is worth $20,000 and you still owe $5,000 on it, you have $15,000 in equity.

Upside Down

Being upside down on your auto loan happens when you owe more on your vehicle than its market value. It’s also known as having negative equity in your car.

If you have questions about our finance process, or if we can help clear up any of these or other financial terms you don't understand, please let us know. Drop by Toyota of Hemet at 350 Carriage Circle, Hemet, CA 92545 to speak to our team in person. We look forward to serving our customers from Menifee, San Jacinto and Lake Elsinore.