To borrow money, either from a bank or other financial institution, to buy your vehicle. Once you've paid off the loan, you'll own the vehicle.

You pay monthly installments for a portion of the car's actual cost. You drive the car for a period of time—usually one to three years—and at the end of the lease, you may either pay the remainder to keep the car or sign up for another lease.

The fee charged by the lender for your loan each month. You'll see it listed as a percentage rate in your monthly car payment.

This is the money you pay upfront for the vehicle, and it is not included in the amount of the loan.

This refers to the length of the loan. A shorter loan term usually means a lower interest rate. So, while your monthly payment might be higher, the overall amount you'll pay for the car will be less.

The difference between the amount of money you owe versus what the car is worth. As you pay off the loan, your equity grows.