When you come to Genesis of Annapolis in Annapolis, MD to buy or lease a vehicle, you may not understand all the auto financing terminologies used. Here are some common terminologies used to help you understand:
Annual Percentage Rate – This is the amount charged for borrowing money. It is often calculated as a percentage of the actual yearly cost of funds over the entire period of a loan.
Balloon Financing – In this case, the amount of monthly installments covers only a portion of the principle. The final balloon payment is normally due to the lender towards the end of the term of the loan.
Buy-here, Pay-Here – Commonly shortened as BHPH. It is an arrangement in which the borrower makes loan installments at the dealership where the vehicle was bought.
Captive – This is a subsidiary of a vehicle manufacturer’s auto financing firm. In order to serve the parent company’s customers, the captive serves as a lender.
