Car Dealer Lingo

Ever walk into a car dealership and not understand a word they are saying? It's like going to the doctor and finding out you have Paronychia. You immediately think, how much time do I have to live, right? find out that's just a fancy term for hangnail. What a relief! Now it's not nearly as scary as you thought it was before, right? Walking into any business or industry can be a very similar experience, don't let the big words scare you! Here's a short little vocabulary lesson into our world! Have you had an experience yourself at a dealership OR have any questions about something you may have heard? Comment below!!

Agreed-Upon Vehicle Selling Price: The price you agree to pay to buy a vehicle. In a lease, the agreed-upon value of the vehicle is used as the basis for calculating lease payments.

Acquisition Fee: A processing or administrative charge included in many lease transactions.

Allowed Mileage: The number of miles that a lease allows the lessee to drive the vehicle without paying an extra charge – usually 10,000, 12,000 or 15,000 miles per year.

Annual Percentage Rate (APR): The cost of credit expressed as a yearly rate.

Capitalized Cost Reduction: In leasing, the sum of any down payment, net trade-in allowance, and rebate used to reduce the gross capitalized cost.

Creditor: A person or organization that extends credit.

Down Payment: Initial payment by a buyer that is used to reduce the amount to finance.

Expected Depreciation: The amount by which a vehicle is expected to decrease in value over a specific period of time.

Finance Charge: The dollar amount the credit will cost you.

Gross Capitalized Cost: In leasing, the agreed-upon value of the vehicle and any items you pay for over the lease term that are included in your lease balance.

Installment Sale Contract: A contract with a dealership to buy a vehicle by paying the purchase price, plus an agreed-upon finance charge, over a certain period of time in installments.

Lender: A bank, credit union or other financing source that lends money directly to you.

Lien Holder: The creditor who has a security interest in the vehicle. If the vehicle owner doesn’t make the payments on the debt as scheduled, the one holding the lien can take and sell the vehicle as full or partial payment of the debt.

Term: The length of the loan, installment sale obligation or lease.

Rent Charge: The portion of the monthly lease payment that is in addition to the depreciation and amortized amounts.

Residual Value: The end-of-term value of the vehicle established at the beginning of the lease and used in calculating your monthly lease payments.

Up-front costs: In a lease, these may include the first month’s payment, a security deposit, a down payment, taxes and registration fees.

Categories: Buying Tips
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