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a list of common car dealership terms and definitions to help you! If you are
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Doc Fees
Documentation fees are designed to pay for the costs
incurred by the car dealer in association with processing paperwork related to
a lease or purchase.
Extended Warranty
An extended warranty gives a consumer additional warranty protection after a vehicle's original factory warranty expires. Car dealers typically sell customers an extended warranty at the time a new vehicle is purchased, but consumers often have up to one year after the purchase to decide if they want to take advantage of an extended warranty plan.
F&I
This stands for finance and insurance. When buying a new vehicle, consumers go to the F&I office to finalize the details of the deal while the dealership prepares the new vehicle for customer delivery. In the F&I office, additional products and services may be offered to the consumer, such as dealer financing, extended warranties, service contracts, insurance, and more. At the end of this process, the purchase contract is finalized and signed, and then the customer drives home in his or her new vehicle.
This stands for finance and insurance. When buying a new vehicle, consumers go to the F&I office to finalize the details of the deal while the dealership prepares the new vehicle for customer delivery. In the F&I office, additional products and services may be offered to the consumer, such as dealer financing, extended warranties, service contracts, insurance, and more. At the end of this process, the purchase contract is finalized and signed, and then the customer drives home in his or her new vehicle.
Gap Insurance
A new vehicle depreciates immediately. That's because it is now a used vehicle rather than a new vehicle. In the first weeks, months, and sometimes years that a consumer is in possession of the vehicle, it may be worth less than what the consumer owes on the car loan at some point, especially if the new vehicle was purchased with no down payment or a small down payment.
If the car is stolen, or damaged beyond repair in an accident, during the period of time that the consumer owes more than the car is worth, there is a gap between what the car insurance company will pay for the vehicle and what the consumer must pay to satisfy the terms of the car loan. Gap insurance is designed to protect the consumer against this difference between actual vehicle value and the balance owed on the loan.
Incentive
An incentive is an amount of money that may be applicable to a vehicle when purchased, and is typically offered by the company that made the vehicle.
Interest Rate
The interest rate is the amount of interest a consumer pays on a new vehicle loan, expressed as an Annual Percentage Rate (APR). The lower the APR, the better the interest rate. Interest rates are determined by the bank depending on a number of variables including credit, length of term, etc.
The interest rate is the amount of interest a consumer pays on a new vehicle loan, expressed as an Annual Percentage Rate (APR). The lower the APR, the better the interest rate. Interest rates are determined by the bank depending on a number of variables including credit, length of term, etc.
Invoice Price
Invoice price refers to the amount of money the car dealer pays the car company for the new vehicle.
MSRP
The Manufacturer's Suggested Retail Price (MSRP) is also referred to as the sticker price. Subtract the invoice price from the MSRP to determine the minimum amount of negotiating room the car dealer has with regard to the selling price for the new vehicle. Vehicles in low supply and high demand are likely to command full sticker price, or higher. Other vehicles are expected to sell for a price closer to invoice, after accessories that may have been added after arrival to the dealership.
Rebate
A rebate is an amount of money paid to a consumer by the car company upon completion of a new-vehicle purchase. Consumers may be given the opportunity to accept the rebate in cash, or can apply the amount of the rebate to the down payment made on the vehicle by signing the rebate over to the dealership. Remember, consumers must pay taxes on the rebate, which is considered income, regardless of whether he or she accepts the rebate as cash or signs the rebate over to the dealer in lieu of additional cash for the down payment.
Service Contract
Consumers are likely to be offered a service contract when completing paperwork in the F&I office. A service contract is a pre-paid plan to have your new vehicle serviced at the dealership and offers a discount compared to the price the consumer might pay for dealer service without a service contract. Here at Terry Labonte Chevrolet, we have Platinum gold and silver contracts for you to choose from.
Trade-in Value
Trade-in value is the amount of money a car dealer is willing to pay a consumer for the consumer's old car. This amount of money is typically less than what a consumer can obtain for the old car by selling it herself or himself via private party. The reason the trade-in value is lower is because the car dealer is taking on any financial risk associated with the old car, including the costs associated with reconditioning the vehicle and preparing it for sale, or transporting the old car to an auction if the car dealer determines it is not right for the dealer's used car lot.
Upside Down
When a consumer is "upside down" on a car loan, he or she owes more money on the vehicle than the vehicle is worth. To avoid becoming upside down on a car loan, consumers should make a larger down payment and choose a model that holds more of its original value over time.
