We
want to make your car buying experience as easy as possible, so we put together
a list of common car dealership terms and definitions to help you! If you are
just starting your search for a car, please click here to browse our inventory!
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Do you have any questions? Please call our Internet Sales Hotline: 888-257-2815
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.
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.
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.
and call our Internet Sales Hotline: 888-257-2815
