Buying a new car is a dream come true moment for many of us, but much like millennial lingo, some of the jargon related to automobile finance can throw us off-guard. We have demystified some of the terms related to car-buying, so that you can have a smoother journey towards your first car.

MSRP or Sticker Price

‘MSRP’ stands for Manufacturer’s Suggested Retail Price. It is the price of the car that is recommended by the manufacturer. Cars are among the many high-priced goods that have an MSRP and it was initially designed to bring uniformity in the price of the same products, across stores. However, retailers choose to quote different prices for various reasons like customer satisfaction or clearing inventory.

Pre-approved Loans

Many banks and financial institutions like Kuwy provide pre-approved loans to their customers, granted they have a high credit score and a clean credit history, among many other criteria. These pre-approved loans have minimum documentation, favorable interest rates and a much faster processing time.

Co-Signer

In case of bad credit history or a lengthy car loan procedure, a family member or close friend who agrees to pay back the loan, is called a co-signer. If a lender asks for a co-signer, it is indicated that the loan provided to the buyer is not based on their income or credit score. Having a co-signer can often get you a better interest rate.

Digital Lending

Digital Lending is the process of availing credit online. In a major shift from the traditional loan disbursement process, fintech companies like Kuwy now provide loans to customers through digital platforms. Digital lending enables faster and easier loan approvals as customer information is added and verified online.

Documentation Fee

A documentation fee is charged by car dealerships to process a vehicle’s paperwork. This fee includes the cost of preparing and filing the sale contract and other paperwork. This is mostly a space for the dealerships to earn profits.

Down Payment

A down payment is money paid upfront in a financial transaction that involves purchase of a car. In high-price purchases, buyers often avail loans to pay the remaining cost. However, the higher one's down payment is, the lower their loan amount, lowering their interest and monthly payments. There are several dealers who offer 0% down payment options, after checking the credit score of a customer, but the interest rates might be higher.

EMI

A very popular term today, EMI stands for Equated Monthly Installments. It is a set amount paid to the lender, every month, in order to pay off loans. EMIs apply to both the principal amount of the loan and the interest rate.

Interest Rate

The interest rate is a small percentage of the amount lent, deposited, or borrowed, commonly known as the principal sum, by the financial institution. This amount is added to the principal sum, while availing the loan. It is ideal to compare the interest rates offered by different financial institutions, before applying for a loan.

Tenure

Loan Tenure means the period for which loan amount is availed for. The repayment tenure on your personal loan affects the EMI amount and total interest. In other words, a longer tenure would mean lower EMIs, while shorter tenures will have a higher EMI amount. It is important to choose the right tenure based on your financial budget and priorities.

Auto Finance Calculators

Many digital platforms have calculators that can help you in making a budget for the car of your choice. The elements in consideration are mostly the amount they can afford or set aside for monthly payment and the commonly available interest rates.

Buying a car can be a happy yet tedious task, but Kuwy is here to make it easier for you. Our Credit Decision Engine backed with latest technologies like AI/ML helps you make the right decisions about the vehicle of your choice and the best possible financial options. Delve into the smart options for car deals, auto-finance, and loan procedures on www.kuwy.in today!