ALT-4 A Comprehensive Automotive Glossary
Understanding the "talk" when purchasing a new or used car can be overwhelming. It is often as if you have gone to a foreign country without a translator. I'll try to provide you with Car Dealership to English dictionary that I hope will be beneficial in your search and ultimate understanding when purchasing your new vehicle.
New: Right off of the showroom floor, although it may have a few miles from previous test drives
Used: Previously owned vehicle.
Demo: Model used by the dealership to show a model lineup to customers, and used by the sales team for daily driving, basically a rolling business card for the model and the dealership. Dealer maintained, and low mileage, they can often be purchased for below retail price.
Dealer invoice price: The price of the vehicle charged to the dealership by the manufacturer.
Base price: The price of a model with standard equipment only.
MSRP: Manufacturers Suggested Retail Price, right on the main sticker after all options are added.
Sticker price: This is the actual cost of the vehicle after all options and destination charges are added by the dealer, it is usually placed right under the MSRP.
Destination Charge: Everybody has to pay for fuel, and the dealership has to pay a fee to the manufacturer for every vehicle that is delivered. And of course that will be passed along to the consumer.
Dealer Holdback: This is an amount that is credited back to the dealer by the manufacturer on a new vehicle and can reduce the actual cost of the car by as much as 3% to the dealership. This is useful knowledge when haggling over price.
Factory incentives: Offers made by the manufacturers to reduce the cost of a vehicle to reduce stock or help clear year end inventory from the lot. Most incentives come in conjunction with lower APR's (annual percentage rates-see below) and longer repayment terms to give the appearance of lower payments.
Factory rebates: CASH MONEY. But you don't get to see it; rebates reduce the purchase price of the new vehicle. Such offerings are made by the manufacturers to help reduce cost and on-lot inventory also. Some offers combined with an incentive make it the perfect time to get into a new car. They can offer substantial savings, especially if you still owe money on your trade in.
Trade In: The vehicle you are driving now, if it is to be used towards the purchase price of your new vehicle. Most dealerships use The Kelley Blue Book to find the value of your car. Smart shoppers will check that information on-line and have it in hand before they go.
Lop sided trade: Trading in a vehicle for which you still owe the bank more than it's worth. It will drive up the purchase price of the new vehicle, regardless of rebates or incentives. Without a large down payment you may be forced to look at a more economical vehicle than your first choice if you still owe too much.
Down payment: The amount of readily available cash you have to put towards the purchase price of a new vehicle. Any money that you can put down will save you money in the end. Remember that you will not be paying interest on any amount that you have already paid. But don't spend it all.
Taxes and tags: That's right, one more little detail that'll cost the consumer an extra few bucks. A savvy shopper can sometimes get the dealer to pay for these things, but most times it comes out of your pocket. These are the state taxes and licensing fees for your new vehicle.
APR: Annual Percentage Rate, this is the cost of the amount of money you will have to borrow to finance your new car. A better credit rating will net you a lower APR. Another way a smart shopper can subvert the tricks of dealerships is to go through their own bank to finance, or at the very least find out their credit score from the big three, Experian, Equifax and TransUnion. Knowing your credit rating beforehand can help you fight for a better interest rate or longer term financing, that will help you get your payments lower, leaving you more money to put fuel in the tank.
GAP insurance: Gap insurance covers the "gap" between what your vehicle is actually worth, and what you still owe the finance company in the event of an accident or theft. On average a new car will be valued 25% less in three months than the day it was purchased. An insurance company only has to pay for the value of the car at the time the damage occurred. If your new car costs $30,000 and you have an accident three months down the road that totals the car, your payments haven't even begun to make a dent in the principle on the loan, and you are responsible for whatever the outstanding amount is. That could be a potential financial pitfall. Don't even think of buying a vehicle without it, you could end up owing as much as 50% of the purchase price if something unfortunate were to happen.
Standard Equipment: All vehicles come with the same basic goodies. But researching cars before shopping will help you to narrow down the manufacturers that offer some of the things that you want as a standard, where others will charge for them. Some of these things are essential safety equipment.
Optional equipment: These are the things that are added to the vehicle by the dealer such as extra speakers, sunroof, heated seats and mirrors. They all look nice, but they cost extra, and you usually have no choice unless you order a vehicle with the specific options you want, and that could take up to eight weeks for delivery.
Crash test ratings: Front and side impact ratings are tests conducted by an independent panel on all passenger vehicles sold in the United States. The higher the rating in stars, the better the vehicle performed. A five star front and side impact rating is considered an optimal result.
Airbags: Airbags are a safety feature on all new cars, some newer vehicles offer side curtain air bags that deploy between the occupants heads and the side windows and help to prevent head injuries and ejection in the event of a rollover. But remember, seat belts should always be worn, and studies have shown that the back seat is still the safest seating are for children.
Reverse and back up alarms and sensors: These can consist of cameras, alarms or other technologies meant to inform the driver of an object or pedestrian in their vehicle's projected path. After several accidents in the past couple of years I don't have to remind the parents of small children how crucial and lifesaving this technology can be, not to mention for household pets, and the ever present bicycle.
ESC: Electronic stability control goes by many names and acronyms, but the general concept is the same. Basically your steering wheel is tied into your vehicle's ABS system through a computer. This computer senses the speed and direction of the vehicle in relation to the amount that the steering wheel is turned. If you were to travel at high speed into a left hand curve and turn to sharply the car would continue forward, plowing into whatever is ahead, with ESC the car will sense this and reduce power to the engine and apply a stronger braking force to the correct wheel to bring the car under control. In this case the left rear wheel. On snowy, icy roads it can be a lifesaver, and on a rain slicked street in downtown traffic it can keep your insurance rates from skyrocketing.
ABS: Anti locking braking system. Studies have shown that in a panic situation people are prone to just jam down on the brake pedal instead of applying "threshold braking", the relevant cause being panic. The ABS keeps the brakes from locking and allows the vehicle to come to a stop quicker by using friction, instead of sliding; this reduces the chance that the driver will lose control as they can still steer while the tires are rolling.
EFI: Electronic fuel injection. This also goes by different names according to manufacturer. But the concept is the same, computer controlled fuel management. All of the vehicles on the road today use some form of it for its efficiency.
Flex-Fuel: A flex fuel vehicle or FFV has an engine that is designed to run on either gasoline or E85 a blend of regular gasoline and up to 85% ethanol. They look exactly the same as their gasoline counterparts and in fact, some people own one without even knowing it. The only down side to E85 is that it doesn't produce as much power during combustion as gasoline, so you may get an average of 20-30% less mileage than if using gasoline alone. And although the price is on average twenty cents cheaper a gallon, for a vehicle that gets an EPA estimated mileage of 17 MPG's with regular gasoline and 12 with E85, driven 15,000 miles a year could add up to hundreds of dollars in extra money spent on E85, but it is helping the environment.
EPA estimated mileage: The Environmental Protection Agency mandates that all automobile manufacturers, with some exceptions, post their MPG's on the vehicle. An estimation of how efficient a vehicle is combined with how far you drive annually can give you a good idea of your annual fuel costs. It also allows the government to track how much greenhouse gasses we are emitting.
MPG: Miles per gallon, that is, how many miles we can expect from one gallon of regular gas under suitable conditions. That is usually rated in HWY and CTY, or highway and city. At highway speeds your vehicle is in its highest gear and the engine is operating at its optimal RPM range, this gives us the best possible fuel economy. During city driving we are usually in stop and go traffic, so the engine is revving up and down and the transmission is constantly shifting gears, this takes away from the engines ability to effectively manage it's fuel.
RPM: Revolutions per minute. This term refers to how fast the engine is spinning. The tachometer in the vehicle measures the RPM's. RPM's and horsepower ratings are relative terms. The gearing in the axles and transmissions can more than make up for lack of horsepower in a family car. If you are looking for a sports car than you would be surprised to know that there are six cylinder cars that are racing and winning against eight cylinder engines. However, your insurance company won't care if the care has low horse power and goes fast, or high horsepower and goes slow, only that the manufacturer markets it as having the "highest available horsepower in its class".
Warranty: This is your basic protection clause protecting you from financial liability in the event that expensive repairs are needed to your car. Even a new car can have a malfunctioning or faulty part installed right from the factory. Usually the engine, drive train, and electronics are covered for a specified amount of time.
Extended Warranty: This is an additional purchase, but if you plan to keep your car for any length of time it is worth the investment. This will extend the date of your warranty contract beyond the specified months or mileage that is provided with the standard warranty. And although most items are covered some clauses in extended warranties exclude parts that are more prone to high mileage failure. A typical item is the timing belt. It is a crucial component that needs to be checked at 40k, 60k, and replaced before 75k. If it breaks it will result in severe engine damage, and chances are that if you are living on your extended warranty these parts will not be covered if this part causes the failure. Be sure to check with your dealer about regular service intervals and exactly what will be checked and covered under both warranties
Regular service intervals: These are required by the manufacturer and the dealer. Not only do they protect them from liability, but they protect your vehicle from unnecessary repairs in the long run. A dealer with a reputable service shop will have the resources and knowledge of your vehicle to diagnose and repair problems quickly. As well as the proper training and tools. They will have knowledge of any recalls and the experience to be able to check for problems before they occur while doing regular preventative maintenance like oil changes and filters and lubricating the necessary parts.
Drive train: The drive train is a broad term. It refers to the entire system that applies power to the wheels. Axles, transmission, drive shafts, half shafts, CV joints, and the engine all fall into this category. A warranty that refers to the drive train covers all of those parts. However, depending on the situation that caused the damage you may be responsible for paying a portion. Spinning wheels and squealing tires is fun, but the computer will register the RPMs at the transmission and the speed at the front wheel sensors. The mechanics will know what you were doing if you bring that new sports car in with a busted universal joint, or a bad CV joint. Big brother is always watching.
Automatic transmission: A transmission that we all know and love- shift it into gear and go. Due to the weight and the design they are not the most fuel efficient, but for sheer comfort they are the best, some vehicles on the market today come with an automatic-manual transmission hybrid that allows you to have the luxury of the auto, but shift manually for the sport feel of a manual.
Manual transmission: A transmission that is shifted through its gears manually by driver input. With operation of a clutch, and stick shift the driver selects the appropriate gear for the situation and proper engine RPMs. Manual transmissions offer the greatest fuel savings over any other available option and with fewer moving parts are less prone to the costly repairs of the automatic.
AWD: All wheel drive vehicles are a hybrid of the four wheel drive market. They use a traction control differential that sends power to each wheel individually, thus allowing the vehicle to be driven on dry pavement without binding the driveline. On snow or ice one wheel can be spinning and the other wheels will still get power to move the vehicle. Since the wheels receive power individually AWD vehicles tend to be a little harder on the brakes, you should have them checked often, especially after winter driving.
Four wheel drive: A four wheel drive is a vehicle that uses a transfer case to split the power equally between the front wheels and the rear wheels. Since the power is divided equally the vehicle should not be used on dry pavement as turning will increase the distance traveled between the wheels and will result in "binding". Breakage will occur and is not covered under the manufacturer's warranty. They can be shifted into two wheel drive for regular driving, and their four wheel drive has selectable ranges according to the type of terrain you need to traverse.
SUV: Not all SUVs are four wheel drive or AWD, but some manufacturers have models available in both configurations. They are larger and more spacious, capable of carrying more gear and towing; these additions to an already large market were meant to fill that void where people wanted the room and towing capabilities but without the added expenses and maintenance that is required with a true off road capable vehicle.
Crossover: The crossover is just that, it is a mix between a car and an SUV, larger and more spacious than a car with a larger cargo capacity, but smaller, more maneuverable and sportier than its larger, less efficient cousin the SUV. Made by several manufacturers, they also come in both two-wheel and all-wheel drive.
Hybrid: These "Green" vehicles are here to stay. Most manufacturers are starting to really push the possibilities of this new genre of vehicle. Depending on the manufacturer they have several ways of limiting the petroleum consumption, thereby cutting greenhouse gas emissions. Some use electric motors that start after the vehicle has attained a certain speed or gear range, and only use the gas engine for acceleration and charging the batteries. Some use a computer to quit sending fuel to a certain amount of the engines cylinders once it has reached a predetermined range of speed or gearing. One thing to consider when purchasing a hybrid is that this is still relatively new technology, which means that it is expensive to repair and maintain. There are a limited number of tax rebates for hybrid owners, and you will save money on fuel, but the cost of repairs and maintenance may offset those savings over the life of the vehicle.
Salesman: This is the person that will initially meet and greet you at the dealership; he'll accompany you during test drives, try to sell you on the vehicle, and walk you through the loan paperwork, and ultimately try to get you your deal. Since he is the one making the commission it's in his best interest to get you to sign the papers, but that doesn't mean he is your worst enemy; the actual terms of the deal are out of his hands.
The GM: The General Manager, this is the guy that the salesman keeps running off to talk to. He is telling the salesman how far he can drop the price how much he can give you for your trade. He knows the actual amount of the dealer holdback. He is the one who can make or break the deal.
The finance manager: His title is his job. He is the guy in the "office" who pulls your credit, obtains financing, explains it all and tries to get you to sign on the dotted line. If you are not aware of how things work, you could wind up with a higher interest rate and/or longer repayment term. Knowing in advance your credit score and the value of your trade in gives you more bargaining power. Before you walk into this guy's office, you should know the maximum amount of monthly car payment that you can realistically afford, and if he tries to get you to settle on a higher amount, hold your ground. He'll either get your payment where you need it to be or you can walk away and shop elsewhere.
By now, hopefully you are ready to enter a dealership with the understanding of some of their jargon and the method to the car buying madness. Good luck, and remember that it's your money. High pressure sales tactics are a sure sign that they don't care about the customer as much as they do the sale. If you start to feel pressured, simply walk away. There's another dealership right around the corner, and if not, it's worth a drive to find one.
