Car Dealership Vocabulary
Did you know that car dealerships have their own lingo? Here is a quick guide to some of the more common phrases you may encounter in a vehicle search, or while working out the logistics of financing a car:
Add-ons: Available features added onto a car, typically by the dealership.
Buyout Price: The price of buying a vehicle at the end of the lease term. If you suspect that you might purchase your car at the end of the lease, carefully compare the costs of buying outright to those of purchasing after a lease.
Candy Store: This term is used to refer to a dealership with plenty of vehicle inventory.
Certificate of Title: This is provided by a title company or law office to indicate a vehicle’s legal ownership.
Dealer Holdback: A small percentage of a car’s cost that the vehicle maker pays back to a dealer after the car has gone home with its new owner. This is what allows dealerships to sell cars at the invoice price or below and still make a profit.
Dealer Incentives: Offers from vehicle manufacturers to their dealers that incentivize them to sell more cars. These are sometimes money back but could be other things, as well.
Dealer Invoice: This is the amount a manufacturer charges its dealers for a vehicle.
Default: Failure to make payments or otherwise abide by a financing contract’s terms.
Destination Charge: The amount charged for transporting new vehicles from the factory to the dealer. These are real costs that the dealer incurs and typically are not negotiable.
Documentation Fee: A charge intended to cover the cost of processing the paperwork involved in a car’s sale. These are almost always in the $100-$150 range.
Down Payment: Cash paid up front by a borrower to reduce the amount financed in a loan or lease.
Excess-Mileage Charges: Penalties paid at a lease’s end if the lessee drives the vehicle a greater distance than the limit agreed to in his or her contract.
Extended Warranty: An agreement to cover certain various service and repair costs beyond the life of the manufacturers factory warranty.
Finance Rate: A loan’s interest rate.
GM: The general manager of the dealership, who oversees the day-to-day operations.
MSRP: Acronym for Manufacturers Suggested Retail Price.
Powertrain: The combination of the vehicle’s engine and transmission.
Prepayment Penalties: Charges for paying off a loan early. People with good credit have no reason to accept prepayment penalties, so be aware of these if you happen to get done paying off your loan early!
Pre-Qualify: To have a lender confirm you’re eligible for a loan without you committing to accepting it. Check to see how this Douglaston, NY Chevrolet dealership can help you with this!
Rent Charge: A portion of your lease payment that goes towards financing instead of principal reduction.
Trade-In Value: The price a dealership will pay for your current vehicle when selling you a new one. Dealer trade-in is typically lower than the price possible if you sell your car by yourself.
Upside Down: When you owe more on a loan than your vehicle’s worth.
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