As you go through the car buying process, there are terms you may come across that you’re not familiar with. Let’s take a look at some of the most-commonly-asked-about terms and learn what they actually mean.

Amount Financed – The dollar amount of the credit provided to you. For example, if a vehicle costs $30,000 and you’ve applied a $2,000 down-payment, your amount financed will be $28,000.

Annual Percentage Rate (APR) – The cost of credit expressed as a yearly rate. Factors that influence your APR: Your credit history, current finance rates, dealers’ compensation, competition, market conditions, and special offers are among the factors that affect your APR.

Assignee – The bank, finance company, or credit union that buys the contract from the dealer.

Credit Report – A document that includes information on where you live, how you pay your bills, and whether you have been sued, or have filed for bankruptcy. Nationwide consumer reporting agencies sell the information in your report to creditors, insurers, employers, and other businesses that use it to evaluate your applications for credit, insurance, employment, or renting a home.

Extended Service Contract – Optional protection on specified mechanical and electrical components of the vehicle that may be available for purchase. It supplements any warranty coverage provided with the vehicle. Read more about the Service Contracts that Friendly Acura offers.

Finance Charge – The cost of credit expressed as a dollar amount.

Fixed Rate Financing – Financing where the finance rate stays the same over the life of the contract.

Guaranteed Auto Protection (GAP) – Optional protection that pays the difference between the amount you owe on your vehicle and the amount you would get from your insurance company if the vehicle is stolen or destroyed before you have paid off your credit obligation.

Negative Equity – The amount owed on a vehicle above its market value. For example, if the amount you still owe is $18,000 and your vehicle’s market value is $15,000, you have negative equity of $3,000. (See also: “Upside Down“) NOTE: The opposite of this is Positive Equity, where the market value of your car is above the amount owed.

Negotiated Price of the Vehicle – The purchase price of the vehicle agreed on by the buyer and the seller. The price should reflect any rebates, discounts, or special offers that you can get at the dealership if you meet certain qualifications, which should be clearly disclosed.

Repossession – If you do not make timely payments on a vehicle, your creditor may have the right to repossess it without going to court or warning you.

Total of Payments – As disclosed on a loan or finance contract, the total amount you will have paid after you have made all the payments as scheduled. For a lease, this is the amount you will have paid by the end of the lease.

Upside Down – When you owe more money to the lender than the car is worth (a Negative Equity position), you are said to be upside down on your loan.