Volkswagen Finance Terms First-Time Buyers Should Know

Buying a car for the first time should be exciting. However, we know all the terms can make it confusing. That’s why we’ve put together a helpful guide of Volkswagen finance terms to help make the process less overwhelming. Get started on your car-buying journey at North Penn Volkswagen.

Loan Term

The length of your loan is known as its term. It’s measured in months and usually ranges from 24 to 84 months.

Principal

The principal is the total amount of money that you borrow from your lender. This amount includes any additional taxes and fees, but doesn’t include interest.

APR (Annual Percentage Rate)

The APR, or Annual Percentage Rate, is a combination of your car’s interest and other fees, expressed as a percentage. You’ll pay your APR over time in addition to your loan principal.

Interest

Interest is a direct fee that you pay your lender. It’s typically based on your creditworthiness and buying criteria. A lower interest rate can help you spend less overall.

Fixed Interest Rates

With a fixed rate, your interest rate will never change. That means that you’ll have consistent payments throughout your loan.

Variable Interest Rates

Unlike fixed interest rates, a variable interest rate can change over the life of your loan. It can give you lower payments initially, although your rates can also rise unexpectedly.

Down Payment

A down payment is any money that you pay upfront. Down payments reduce how much you finance, so large down payments help you spend less overall, since you’ll pay less interest.

GAP Insurance

Guaranteed Asset Protection (GAP) insurance is a form of optional coverage. If you face a total loss on your vehicle, your auto insurance only covers the current market value of your vehicle. GAP insurance can cover any remaining balance left on your loan.

Apply for Volkswagen Financing in Colmar, PA

We want to make your first car-buying experience as easy as possible, which is why our team is here to help with financial vocabulary and any other hang-ups you may have. Visit North Penn Volkswagen to shop with confidence today!