Common Finance Terms

Common Finance Terms to Know

Terms in Auto Financing: The Basics

Financing sometimes requires a language of its own, one reason many car shoppers get anxious when buying a new vehicle. That's why we at Rudig Jensen have put together a list of the most common terms in automotive financing, helping you to understand some of the words and concepts that may be used during the buying process.


  • APR - APR stands for the annual percentage rate. This is the annual rate of interest for borrowing money.

  • Blue Book - This term comes from the company Kelley Blue Book, a third-party that works to provide accurate, real-world values of cars. The "Blue Book" value refers to the amount your car is worth without any strings attached.

  • Credit - Your credit score or credit rating is a number from 300 to 850 that shows your creditworthiness. In other words, credit shows how likely you are to pay back a loan.

  • Depreciation - The amount of value a car loses over time. This can be linked to age or wear and tear.

  • Lease - This is a contract with a dealership that lets you borrow a car for a long period of time. Essentially, leasing is like renting.

  • MSRP - The Manufacturer's Suggested Retail Price (MSRP) is the price a brand recommends their car is sold for.

  • Title - Sometimes called the pink slip or certification, a title is evidence of ownership.

  • Trade-in Value - You can trade your car to a dealership in exchange for money or credit to buy a new car. Trade-in values are often sometimes more than the Blue Book Value because they are used as incentives.

  • Upside-down - If you're upside-down on a loan, that means you owe more to the lender than the car is worth-one reason many prefer to buy used or to lease.



These are some of the basic terms associated with auto financing. For more information, talk to the experts in the Finance Department at Rudig Jensen.
Rudig Jensen

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