The ABC of your vehicle financing – sorted!
Test drive: When you take a car for a drive to get an overall “feel” for the vehicle.
Book value: What your car is worth at any given time, closely linked to what it probably sell for.
Credit profile: This includes your credit history, in other words, your record of paying back other companies you’ve borrowed money from.
Depreciation: Over time your car loses value. Unless it’s a rare vintage in peak condition, you’ll always sell it for less than you bought it because of depreciation.
Down payment: A down payment is the amount that the buyer pays for in cash – like a deposit - and that is not covered by a loan. The bigger your down payment, the less you have to borrow, the lower your repayments and the less your interest. Save as much as you can before you buy a car.
Lending rate: It’s the interest the creditor charges on the money that’s being borrowed.
Principal amount: It’s the overall capital amount of what you are borrowing, excluding interest.
Purchase agreement: A contract that includes all the details of the purchase, including the agreed price and payment plan. A copy of the purchase contract has to be given to both the buyer and seller for reference. It can also include copies of important documents such as your ID.
Registered owner: The registered owner refers to the person in whose name the car is registered. When you buy a car, the registration of the vehicle in your name should be done within 21 days of making the purchase payment.
Trade-in value: The trade-in value is the amount given to a customer for their old car if they buy a new one. This is a credit, which usually reduces the price of the new car. Basically, you sell your old car to the dealer to help buy a new one.