Dealer Dictionary
Decode common pricing, financing, lease, trade, title, and contract terms. Each consequential entry gives you a verification move and links to current official guidance where it matters.
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Decode common pricing, financing, lease, trade, title, and contract terms. Each consequential entry gives you a verification move and links to current official guidance where it matters.
Share The Glossary
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Showing 55 terms
A charge identified by a lessor for originating or acquiring a lease. Whether it applies, its amount, and whether it is paid upfront or included in the gross capitalized cost should appear in the written lease disclosures.
Pro Tip: Include it when comparing the amount due at signing and total lease cost.
An appraisal term for a vehicle's current cash value under the appraiser's assumptions. A dealer, insurer, and outside buyer may produce different values because their purpose, condition adjustments, and market inputs differ.
Pro Tip: Get dated written offers and ask for condition deductions instead of treating one estimate as the only market value.
Separate products or services such as protection products, etching, tracking, accessories, or service contracts. Ask for each item's cash price and do not accept a charge for a product you did not agree to buy.
What to say about thisWarning: A product being installed does not by itself show that you authorized the charge. Compare the itemized out-the-door total with and without it.
A standardized measure of credit cost, expressed as a yearly rate. APR reflects the interest rate and certain credit charges under Truth in Lending rules, so APR and the note interest rate are not necessarily the same.
What to say about thisPro Tip: Compare written offers using the same amount financed and term, then review APR, finance charge, total of payments, and payment schedule together.
A larger payment due at the end of some credit agreements after smaller scheduled payments. The contract and Truth in Lending payment schedule should identify the amount and due date.
Pro Tip: Do not compare only the earlier payment; include the balloon in total cash-flow planning.
Sales shorthand for asking a buyer to increase a price, payment, down payment, or other offer. The label does not explain which underlying number changed.
Pro Tip: Ask for a revised written itemization and compare it with the prior version before agreeing.
The interest rate a lender quotes to a dealer for financing a consumer's purchase. The dealer's offered financing may differ, and the dealer may receive compensation depending on its arrangement with the lender.
What to say about thisPro Tip: Compare the offered APR and complete credit disclosures with a written outside preapproval using the same loan amount and term.
A dealership document commonly used to itemize the vehicle, price, trade, fees, taxes, add-ons, and balance. Its name and contractual role vary, so compare it with every document that will govern the final transaction.
Pro Tip: Keep each version and reconcile every line before signing the final documents.
In a lease, gross capitalized cost is the agreed vehicle value plus any other items capitalized under the agreement. Adjusted capitalized cost is the gross amount after the capitalized cost reduction; it is one input used to calculate scheduled payments.
Pro Tip: Request gross capitalized cost, each capitalized item, the reduction, and adjusted capitalized cost in writing.
The stage when a seller asks for a commitment or signature. A closing question does not change your need to review the complete price, financing, products, and documents.
Pro Tip: Use a personal deadline and leave before signing if you do not have enough time to verify the deal.
A used vehicle marketed under a certification program. The certifier, inspection, warranty provider, coverage, and eligibility rules depend on the written program; a dealer program and a manufacturer program are not automatically equivalent.
What to say about thisPro Tip: Ask who certifies and administers the program, then review the inspection report, Buyers Guide, and warranty. Still arrange an independent inspection.
An unlicensed dealer who poses as a private seller. Warning signs can include multiple vehicles for sale, a seller name that does not match the title, or resistance to completing the state title process.
Warning: Verify the seller's identity and ownership against the title and follow your state motor-vehicle agency's transfer process.
A manufacturer invoice or similar reference amount associated with a vehicle. It does not establish the dealer's complete net economics because programs, credits, expenses, and timing vary and may not be visible to the buyer.
Pro Tip: Compare the same exact VIN, equipment, incentives, and itemized out-the-door charges across dated written quotes.
A term used for some manufacturer-to-dealer payment arrangements. Programs and amounts vary, and a holdback estimate does not reveal the dealer's complete cost or create a buyer entitlement to a particular price.
Pro Tip: Negotiate from competing written exact-VIN out-the-door quotes rather than a guessed internal-cost formula.
Compensation a dealer may receive in dealer-arranged financing, including compensation connected to the difference between a lender's buy rate and the consumer's contract rate. The structure and amount depend on the lender-dealer arrangement.
What to say about thisWarning: The buyer-verifiable numbers are the offered APR, amount financed, term, finance charge, total of payments, and creditor identity.
A manufacturer-disclosed charge associated with transporting a new vehicle to the dealer. Confirm how it appears on the window sticker and make sure a differently named dealer charge is not being confused with it.
Pro Tip: Compare final itemized out-the-door totals rather than debating one label in isolation.
A charge that may be due at scheduled lease end under the lease agreement. The amount and any conditions or waivers are program- and contract-specific.
Pro Tip: Check the lease disclosures and contract for the amount, timing, and conditions.
A dealer charge described as covering document or processing work. State rules and labels differ, so include it in the written itemized out-the-door total when comparing sellers.
What to say about thisPro Tip: Your state's motor-vehicle or consumer-protection agency is the source for state-specific fee rules.
Cash or credited value paid upfront that reduces the amount financed in a purchase. Verify that the contract applies the exact amount and separately identifies any trade credit, rebate, or fee.
A name some dealers use for a document recording work, accessories, repairs, or other promises due after the sale. Document names vary; the important step is putting the exact promise, deadline, responsible party, and cost in a signed deal document.
What to say about thisPro Tip: Spoken promises are harder to enforce. Keep the purchase agreement, Buyers Guide, due bill if used, and every related message.
The difference between a vehicle's current value and the payoff amount on its debt. Positive equity means value exceeds payoff; negative equity means payoff exceeds value.
Pro Tip: Use a current written payoff and a dated vehicle offer when calculating it.
A separate contract for specified repair or service coverage. A service contract is not the same as a manufacturer's warranty, and its administrator, coverage, exclusions, deductible, claims process, cancellation, and transfer terms vary.
What to say about thisWarning: Review the total price and any overlap with existing warranty coverage before adding it to the amount financed.
The dealership function that completes financing and transaction documents and may offer optional products. Verify that every number and selection matches the written deal before signing.
Pro Tip: Ask for the product menu and contracts, and require a revised buyer's order and credit disclosure after any change.
Inventory financing a dealer may use to acquire or hold vehicles. The dealer's actual balance, interest, credits, and carrying decisions are private and variable, so lot age does not guarantee a discount or reveal a minimum price.
Pro Tip: Treat vehicle age as one fact and compare current written quotes rather than assuming internal urgency.
A negotiation worksheet that may display vehicle price, trade value, down payment, and monthly payment together. Changing one box can affect the others, so the worksheet is not a substitute for an itemized out-the-door price and complete financing disclosures.
What to say about thisWarning: Fix and document the vehicle price first, then review trade and financing as separate sets of numbers.
A product intended to address some difference between an auto debt balance and the amount paid after a covered total loss. GAP may be insurance, a waiver, or another debt-cancellation product, and the provider, exclusions, limits, cancellation, refunds, and claims rules are contract-specific.
What to say about thisPro Tip: Ask for the total price and full agreement, and verify whether it is optional before signing.
A contract for the right to use a vehicle for an agreed period and conditions rather than buying it at the start. Required disclosures cover items such as amount due at signing, payment schedule, total of payments, gross and adjusted capitalized cost, residual value, rent charge, mileage, early termination, and purchase option where applicable.
What to say about thisPro Tip: Compare a lease and purchase over the same time horizon using the written cash flows and end position for each.
A ratio comparing the amount of credit to a stated vehicle value. The value source and included financed items matter, so ask the lender what amount and valuation it used.
Pro Tip: Track negative equity and optional products separately so you can see why the amount financed exceeds the vehicle price or value.
A dealer-added price amount above the manufacturer's suggested price. It is one part of the seller's offer, not a tax or government charge.
What to say about thisPro Tip: Request a written itemized out-the-door quote and compare the exact vehicle with other available offers.
A lease-end charge for miles above the contract allowance. The per-mile amount, measurement, purchase of extra miles, and exceptions depend on the lease agreement.
Pro Tip: Use your realistic driving estimate and compare the written allowance and overage terms.
A decimal input sometimes used to express the lease's rent-charge calculation. The complete lease cost still depends on capitalized cost, residual value, term, payments, and other disclosed charges.
What to say about thisPro Tip: Request the rent charge and all Regulation M disclosures instead of converting the factor into a loan APR.
Warning: A money factor is not APR. Regulation M restricts describing a lease percentage as an annual percentage rate or equivalent annual interest rate.
The manufacturer's suggested retail price shown for a new vehicle. It is a reference, not a promise that the transaction price will be above or below it.
Pro Tip: Compare exact-VIN written out-the-door quotes, including dealer adjustments and accessories.
The amount by which a vehicle's loan payoff exceeds its current value. In a replacement transaction, that amount may be paid separately or included in the new amount financed if approved and disclosed.
Warning: Confirm the payoff, trade credit, and any amount carried into new financing as separate written line items.
Changing, disconnecting, or misrepresenting an odometer or mileage record. Compare the displayed mileage with the title, disclosures, maintenance records, inspection findings, and available history records.
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Warning: Mileage records can be incomplete. Investigate inconsistencies before buying and report suspected fraud through the appropriate authorities.
The total cash price to take delivery, including the vehicle, dealer products, dealer fees, taxes, and government charges shown in the quote. It is essential for price comparison but does not replace APR, finance charge, total of payments, or other financing disclosures.
What to say about thisPro Tip: Get a dated, itemized written OTD quote tied to the exact VIN and stated incentive conditions.
Presenting optional products or changed terms inside a monthly payment without clearly disclosing each product's price and the complete financing effect. A payment alone cannot show what was added.
What to say about thisSources
Warning: Compare itemized deals with and without each product, including amount financed, APR, finance charge, total of payments, and payment schedule.
An inspection of a used vehicle by an independent mechanic selected by the buyer before purchase. It can assess current condition that a title record, history report, certification, or test drive may not reveal.
What to say about thisWarning: If a seller will not permit a reasonable independent inspection, pause and consider another vehicle.
A contract charge that may apply when credit is paid before scheduled maturity. Whether one is permitted or included depends on the agreement and applicable law.
Pro Tip: Read the payoff and prepayment section and ask the creditor to identify any charge in writing.
An incentive that reduces a qualifying buyer's price or amount due under stated terms. Eligibility, expiration, vehicle applicability, and compatibility with promotional financing vary.
Pro Tip: Compare written scenarios and verify every eligibility condition instead of assuming two incentives can be combined.
A state title brand generally used after a salvage vehicle is rebuilt and meets that state's requirements. Inspection, registration, insurance, and disclosure rules are state-specific, and the brand does not establish repair quality or current condition.
Warning: Confirm the brand with the state, review available history records, and obtain an independent structural and mechanical inspection.
A safety issue addressed through a manufacturer recall campaign under NHTSA oversight. A vehicle history report is not a substitute for checking the exact VIN in the official NHTSA recall lookup.
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Pro Tip: Check open recalls before purchase and ask the manufacturer or authorized dealer about remedy availability and completion records.
Residual value is the end-of-lease value used in the base periodic payment calculation. A purchase-option price is separately disclosed and may differ from the residual value.
What to say about thisPro Tip: Compare the residual, adjusted capitalized cost, rent charge, total of payments, and purchase-option terms together.
A state title brand associated with a vehicle reported as salvage or meeting that state's definition. Branding, rebuild, registration, inspection, and insurance rules vary by state.
Warning: A title record does not establish repair quality or current safety. Verify the state record and obtain an independent inspection.
Delivery of a vehicle before dealer-arranged financing is final. If financing is not accepted, the dealer may later request changed terms; the contract and state law determine the parties' options.
What to say about thisWarning: Before delivery, ask whether financing is final, identify the creditor, and read every conditional-delivery term. After a callback, compare all changes with the signed documents.
An industry term for some manufacturer-to-dealer incentive structures tied to performance levels. Programs, measurements, timing, and dealer position are variable and generally not buyer-verifiable.
Pro Tip: Do not assume a calendar date guarantees leverage. Compare current written offers on the exact vehicle.
The period over which scheduled loan payments are due. A longer term can lower the scheduled payment while changing finance charge, total of payments, payoff timing, and negative-equity exposure.
Pro Tip: Compare the same amount financed across terms using the full written disclosures.
A phrase sometimes used when approval or a financing term is said to depend on buying another product. The facts and governing rules matter; request the claimed condition in writing and verify it directly with the named lender or appropriate regulator.
What to say about thisWarning: Do not rely on a verbal statement that a warranty, GAP product, or other add-on is required. Ask for the creditor and written condition.
A state-issued ownership record for a vehicle that can identify the owner, lien information, and title brands under that state's system. Transfer, branding, electronic-title, and registration rules are state-specific.
Pro Tip: Verify the VIN, seller name, lien status, and transfer instructions with the relevant state motor-vehicle agency before paying.
Concealing or losing a title brand through improper transfers, false documents, or differences between title systems so a damaged vehicle appears to have a cleaner record.
Warning: Use state title records and an NMVTIS-based report as evidence inputs, then verify current condition through an independent inspection.
A state-specific reduction in the taxable amount that may apply when a trade-in is part of a purchase. Eligibility, tax base, vehicle types, transaction structure, and documentation vary by state.
Pro Tip: Verify the rule and dollar amount with the relevant state tax or motor-vehicle agency, then enter that verified amount in any comparison.
A vehicle transferred to a dealer as part of another transaction. The trade credit, payoff, positive or negative equity, and any state-specific tax treatment should be shown as separate line items.
What to say about thisPro Tip: Get dated outside offers and compare the complete purchase and trade numbers without assuming a universal tax result.
A vehicle with a prior owner or use history. Warranty status, certification, Buyers Guide terms, title history, recalls, and current condition are separate checks.
Pro Tip: Review the Buyers Guide, verify title and recall information, and arrange an independent inspection.
A compilation of records available to a provider. NMVTIS reports focus on state title and brand data, latest reported odometer information, and certain junk, salvage, and insurance total-loss records; they are not a complete accident or repair history and do not establish current condition or recall status.
Warning: Check recalls separately with NHTSA and use an independent inspection. Missing history does not prove that damage or repairs never occurred.
A vehicle identifier commonly containing 17 characters for modern vehicles. Use the exact VIN to match the vehicle, advertisement, quote, title, recall lookup, history records, and purchase documents.
Pro Tip: Compare the dashboard and door-label VIN with every written document before signing.
The required label on a new vehicle showing manufacturer information such as suggested retail price, equipment, and other required disclosures. A separate dealer addendum may list dealer-installed items or markup.
Pro Tip: Photograph both labels and reconcile them with the exact-VIN written quote and buyer's order.