Car Dealer Terminology

To make the car-buying experience more enjoyable, it’s important to understand the car dealer terminology. This allows you to be aware and educated so you get the best deal. Here are some of the most popular terms used by dealerships. Now you can be informed when buying a car at the dealership!

Doc Fees: Documentation fees are those that a car dealer charges for processing paperwork for purchases or leases.

Dealer Prep Charge: This is a fee accessed when a new vehicle arrives at the dealership from the factory. The dealership has personnel preparing the vehicle for sale and sometimes charge the buyer.

Extended Warranty: This is additional protection after the original factory one expires. You have up to a year to decide if you want this warranty or not, so don’t rush into it if you aren’t sure.

F&I: Stands for finance and insurance. When you buy a new car, consumers are sent to this office to finalize the details of your deal. Additional products or services may be offered to you. At the end of this process, the contract is finalized and signed before you drive your new vehicle and home.

Gap Insurance: This is insurance that covers the difference of the cost of the vehicle recovered from insurance and the cost of paying off a loan (if totaled). Depreciation occurs the minute someone drives the car off a lot.

Incentive: This is money that is paid to the dealer from the automaker after a sale is made. The car dealer can pass on a portion or all of the savings to the customer to inspire a sale.

Invoice Price: This is the amount of money that the dealership pays the automaker for the car. The invoice price is higher than what the factory actually pays for the vehicle.

MSRP: Manufacturer’s Suggested Retail Price is known as the sticker price. Subtract the invoice price from this and that is the bottom line that a dealer can sell a vehicle for.

Trade-In Value: This is the amount that the dealer will pay for a trade-in vehicle. The amount is typically less than the retail value as the dealership still needs to make money off of the dealership and make any necessary repairs and/or paint.

Whatever the car you want to finance, Insta Auto can make it easy to save on car finance from the convenience of your smartphone.