Car finance can be full of abbreviations and phases. Read The Co-operative Motor Group Finance Glossary to help you understand what these phases and abbreviations mean.
- APR (Annual percentage rate) - a standard method of calculating the full cost of the interest and other charges on the finance. You should use the APR to compare the cost of different finance options, although lease agreements will not show an APR.
- Balloon Payment - a one-off payment made by you at the end of some finance agreements. It will reduce your monthly payments.
- Credit Rating - a scoring system used by finance companies to help decide how much finance to make available to you. Click here for more information
- Flat Rate - the base interest rate charged on the finance. Dealers will sometimes quote a monthly or annual flat rate but you should ask for the APR, which more accurately describes the true cost of the finance.
- Guaranteed Future Value (GFV) - it is the lowest amount that your car is guaranteed to be worth at the end of a contract purchase deal and will usually be the same as the deferred amount on the finance.
- Residual Value - the value of your car at the end of the finance agreement, after a certain time and mileage. It may or may not be guaranteed, depending on the terms of your agreement.
- Total Amount Payable - the total cost of the finance, including any interest or other charges, if you repay the finance over the agreed period. This is a good way to compare the actual cost of various types of motor finance.
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