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Dealer charges
Charges for extra services or
products sold by the dealer, including rust proofing, undercoating and
extended warranties.
Dealer holdback
An allowance, usually between 2 percent and 3 percent of MSRP, that
manufacturers provide to dealers. A holdback allowance may allow the dealer to
pay the manufacturer less than the invoice price. A buyer could obtain a car
below invoice price and the dealer would still make a profit.
Dealer incentives Programs
programs offered by manufacturers to
increase the sales of slow-selling models or to reduce excess inventories.
Dealers may elect to pass on the savings to the buyer.
Dealer invoice
The amount that a dealer is invoiced by the manufacturer for a vehicle
and any options.
Dealer preparation
An additional charge to consumers that dealers try to impose on
buyers. It represents pure profit for the dealers, who have already been paid
by the manufacturer for the cost of preparing the car for sale.
Dealer sticker price
This is the Monroney sticker price plus the
suggested retail price of dealer installed options, dealer preparation and
undercoating. It usually appears on a separate sticker.
Default
The
condition that occurs when a consumer fails to fulfill the obligations set out
in the loan or lease.
Deposit
An
amount of money held by the dealer to hold a deal for a period of time until
the paperwork is complete; usually applied toward the down payment. Also see
security deposit.
Depreciation
An asset's decline in value over the course of its useful life. Autos
depreciate steeply in their first few years, beginning at the moment they are
driven off the lot. In an auto lease, a charge for depreciation is the chief
part of a consumer's monthly payment.
Destination charge
The fee charged for transporting the vehicle to the dealer from the
manufacturer or port of entry. This charge is to be passed on to the buyer
without any markup.
Direct financing
A smart buyer's practice. A buyer who lines up financing through an
outside financial institution rather than through the dealer is said to have
direct financing. This doesn't mean dealer financing is a worse deal -- on the
contrary, some dealers offer deeply discounted financing. But arranging the
financing separately allows the buyer to focus on one thing -- getting the
best price on a car, rather than mixing pricing and financing. Consumer
advocates urge buyers to keep the deals separate: Get the best price on a
vehicle, and then see if the dealer can beat the pre-arranged financing. Apply
for a low APR auto loan from PeopleFirst.com
Disposition fee
A fee charged by some lessors at the end of a lease. The sum, spelled
out in the lease, charges consumers for the privilege of giving back the
vehicles they had leased.
Down
payment
A payment
in cash or trade-in value that reduces the amount of a car's purchase price
that is financed.
Early termination charges
Charges that the lessee must pay if the car
is turned in early before the term of the lease is over.
Equal Credit Opportunity Act
A federal law that prohibits discrimination
in credit transactions on the basis of race, color, religion, national origin,
sex, marital status, age, source of income or the exercise of any right under
the Consumer Credit Protection Act.
Excess
wear charge
Most
leases set limits for wear and tear on the car during the lease term. The
lessee must pay charges for exceeding the limits when turning in the car at
the end of the lease.
Extended
warranty
Also known
as service contract. A contract that covers certain car repairs or problems
after the manufacturer's or dealer's warranty expires. Extended warranties are
sold by car manufacturers, dealers and independent companies. With a new car,
the extended warranty usually must be purchased by the end of the first year
of ownership.
Fair
market value
The
amount that a willing buyer would pay at a certain point in time for the
vehicle in an arms-length transaction.
Finance lease See open-end lease.
Gap
insurance
A type of
insurance offered to auto lease customers. It pays the difference between what
you own and what the vehicle is worth in the event the car is stolen or
destroyed.
Insurance
In auto terms, a contract in which one party agrees to pay for another
party's financial loss resulting from a collision, theft, or other damage.
Leases and loans generally require consumers to maintain a certain level of
insurance.
Interest
The cost of borrowing money, expressed as an annual
percentage.
Invoice price
The manufacturer's initial charge to the dealer. The price may not be
the dealer's final cost because dealers receive rebates and other incentives
from the manufacturer. The invoice price always includes freight, also known
as the destination charge
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