Car Terms You Should Know Before Getting Your First Car

Car Terms You Should Know Before Getting Your First Car

A man giving the thumbs up to the camera in a suit.

So you’ve finally made the decision to purchase your first car. Congratulations! Odds are, this is the result of many weeks of serious thought, and you deserve plenty of credit for sticking with things for so long. However, that doesn’t mean that the process is going to be straightforward from start to finish, and the trouble could well begin before you even get yourself onto the lot. 

Let’s face it: cars are a big deal, and there’s hardly anything more exciting than buying your very first vehicle. Quite apart from the sheer amount of liberty you’ll be granted by virtue of your first set of wheels, they’re also pretty vital when it comes to getting to and from work, the grocery store, your friend’s house, the movie theatre, restaurants… the list goes on. It can often be tricky to keep your excitement at manageable levels, especially as you see the dealership approaching from up ahead. 

Buying a new car can be an exciting experience, but it can also be a little intimidating. With so many different forms of media being devoted to automobiles these days — from ads to movies to television shows to articles — it can often feel like everybody on the planet knows everything about cars, except for you.

This will only get more worrying if you turn up to the lot and find out that the dealer doesn’t speak English, as you’d previously imagined, but is instead fluent in jargon. Nobody’s worse than the occasional car salesman when it comes to using too many technical terms when simple ones would do. And if you’re anything like we were when we got our first cars, you’ll probably be a little spooked. Car loans are a minefield, there’s no point mincing words about it. However, if you’re prepped beforehand, you may be able to negate the worst of the confusion that the auto loans companies have to throw at you.

That’s why we’ve decided to come up with a list of the car terms you absolutely have to know before getting your first car. Whether you’ve been considering this car loan for a long time or whether you’re a fresh convert to the world of auto loans companies, knowing beforehand what these few terms mean will potentially save you from a world of headaches. Some of these will be car specific, while others will relate specifically to car loans, but either way, they’re all going to prove useful as you embark on this next step in your financial life. 

Without further ado, let’s dive right in. Here are the most crucial car terms you need to know before you get involved with your very first car loan.

Interest

Somebody checking out financial data on a laptop.

You probably already know what interest means, but it never hurts to have a quick refresher, especially since interest will play a vital role in the eventual car loan deal you wind up with. Interest is basically a percentage of the overall loan deal that you’ll be expected to pay back on top of the principal of the loan. The better your credit score is, the lower the interest you’ll be expected to pay, and vice versa. This happens because of exactly what interest means in terms of the loan.

Money paid in interest doesn’t actually go towards the value of the car. It’s basically a mathematical way of offsetting the risk the auto loan company incurs by lending you the money to pay for the car in the first place. That’s why the lower your credit score is, the more interest you’ll be expected to pay. The higher the score, the more reliable you’ve historically been when it comes to paying back your financial commitments in full and on time, meaning that the company will take on less risk when approving you for a car loan.

Mileage

Mileage refers to the amount of distance any given car has already driven. The salesman you’re dealing with will no doubt devote a lot of time to talking about the mileage of the vehicle in question, so be sure to know roughly what you’re dealing with beforehand to avoid any unexpected, unwanted surprises. Generally speaking, the more miles a car has already driven, the greater the chance that something will go wrong. It’s a basic rule of mechanics, but that doesn’t mean that it’s the same across the board.

Some makes are known for being more robust, for example. Toyota is a prime example of this, as are most German car makes. Because they’re engineered for the long-term, each mile is less harmful to the overall functioning of the vehicle. With that being said, one hundred thousand miles will be much less worrying for a car like a Toyota or a Honda than it would be for a Chrysler or a Chevrolet. When you’re taking the mileage of the vehicle into account, be sure to do some Googling about the manufacturer in order to get a better idea of just how much of a discount you should be able to expect.

Transmission

A black and white shot of an engine.

 

 

 

The transmission has to do with the way the gearbox of any given car is set up. There are two main choices, manual and automatic, and while they don’t differ all that much, it’s worth getting the two straight in your head before you step onto the lot of the auto loan company. For one thing, there are some kinds of transmission that are more standard in certain countries than others; for another, depending on how and where you learned to drive, you may not be able to handle a car with the wrong kind of transmission.

Manual transmission cars have a clutch and are operated completely different than cars with automatic transmission. If you never learned to drive with a clutch and instead relied on an automatic gearbox to do the work of shifting gears for you, the last thing you want to do is wind up with a manual vehicle, since you might not be able to drive it at all. Manual transmission cars are much more popular in Europe, while automatic is the norm in the United States. It all depends on where you are.

That’s not where the trouble ends, however. The transmission is a vital thing to have a handle on since it’ll be one of the most common reasons your car needs to end up in the shop (assuming, of course, that it will at some point or other throughout the course of your relationship with the vehicle). If you get a car with a manual gearbox but you’re not entirely comfortable with it, you might make a few less than ideal gear changes while you’re driving it. Every single one of these will do damage to the transmission, and over the course of a few years, you might find yourself needing a replacement transmission system, which could run you up a few hundred dollars in the worst-case scenario. 

Don’t let the salesman tell you which kind of transmission you need; it’s a personal choice and needs to be treated as such. This is a vital aspect of any serious, long-term car loan deal, so take your time researching it and don’t get involved in any discussions before you’ve had plenty of time to consider what exactly you need.

 

Depreciating Assets

This is a term you’ll no doubt hear a lot throughout the course of your negotiation with the auto loan company of your choice. It refers to exactly what a car represents in financial terms. An asset is something you own, and depreciating means that it loses value. Basically, this term means that as soon as you drive the car off the lot, it’ll start to become worthless and less, with that figure compounding as time goes on.

Don’t panic, though; it’s not a bad thing. All cars are depreciating assets. This is one reason why it’s often a better financial decision to opt for a used vehicle; because it costs less than a new automobile, it’ll proportionally lose less value over time, meaning it might be a better choice, depending on your circumstances. 

 

Chassis 

The chassis is the frame of your car. More often than not, car manufacturing companies will borrow a chassis from another make to use as the base of their creation. For example, Ford has created a few different kinds of chassis that many other manufacturers have used, rather than create their own. After all, why fix what isn’t broken? It’s important to have a handle on what a chassis is before you get involved with the auto loan company, however, just so that you know that a chassis coming from another manufacturer isn’t anything to be worried about.

It’s a shame to have to say it, but the fact remains that the car salesperson’s primary job is to get you to buy the car. Some are less scrupulous than others, but there are few indeed who wouldn’t try to confound the buyer with some obtuse terminology, especially as the end of the month approaches and quotas need to be hit. There’s absolutely nothing wrong with a car having a chassis that comes from a different maker, and there’s no reason on earth you should may any extra because of that one simple fact. Do your research beforehand, and don’t give them any excuser to think of you as a soft sell; it’ll help you in the short-term, throughout the negotiations, but it’ll pay dividends in the long-term, as you’ll end up with a vehicle that suits you both financially and personally.

 

Car Loans Conclusion 

So there you have it: the car and loan terms you absolutely need to know before negotiating with your first auto loan company. Some of them are more widely well-understood than others, but if there are any you’re still a little unclear on, don’t hesitate to do a little more homework of your own before beginning the car loan negotiation with the auto loan company of your choice. We hope you’ve found this guide helpful; if you’ve got any terms we potentially missed out on, feel free to let us know in the comments below.

As a final note, if you’ve been trying to get yourself a car loan but you’re having a hard time on account of a less-than-perfect credit score, why not give our experienced and friendly team here at carloans.ca a call? We’re not just used to helping people with bad credit scores secure auto financing — we’re professionals. On top of the extensive inventory of vehicles we have access to, we also make a point of not discriminating between good credit scores and poor credit scores, meaning every application receives the exact same treatment. Get in touch with us today, and we just might be able to help you out.

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