Glossary of car buying terms

  

ADVERTISING ASSOCIATION FEE  This is a fee that appears on an actual dealer's invoice, and represents the local TV, print, or internet ads you see for your local area "fill in blank with a brand here" dealer.  It should be a line item on an actual dealer's invoice.  It is a legitimate cost of doing business, but you should not hesitate to ask to see an actual dealer's invoice for a specific vehicle you are considering to make sure it is there.  It is frequently represented with an acronym of some sort (some examples might be FDAF for Ford, TDA for Toyota, MACO or DAG for BMW, etc...) 

Keep in mind that some dealers are located in areas that don't have advertising association fees, or are in one that does, but sometimes have the option to not participate in it, and won't have one for their specific dealer's invoices even though all the other dealers in the area do.  Some advertising association fees even let each dealer set the amount they wish to be charged dealer by dealer, so it can actually vary case by case in a given metro area.  Again, just ask to see the actual invoice for a vehicle you are considering, to make sure it's there.  If it's there, they had to pay it; if it's not, they don't have one.

APPEARANCE PACKAGE  This is a set of mandatory items dealers may put on their vehicles after they arrive from the manufacturer.  They tend to be external bolt on items (usually removable).  Some items that might be found in an appearance package are:

  • Floor mats (either carpeted or all weather (rubber) versions)
  • Mud guards (also called splash guards)
  • Wheel locks
  • Fender well trim (also called wheel lip moldings)
  • Door edge guards
  • Pinstripes (either stick-on or painted)

Appearance packages may sometimes be removed, or included free of charge as a negotiating tool. They are a way to pad the dealer’s profit margins, as they are usually very overpriced.

BUYER’S ORDER  A buyer’s order is a summary of what both parties have agreed to thus far.  It is NOT the final sales contract committing you to buy the vehicle.  The buyer’s order should list the agreed upon price for the vehicle and a breakdown description of the exact make, model style, color, and options on that vehicle, as well as the vehicle identification number (VIN) of the vehicle in question if one has been assigned to the vehicle already.

CONVEYANCE FEE  This is a fee a dealer may have at their discretion.  It does not reflect any particular cost (they may tell you otherwise), and depending on what state you're in, may have a state mandated upper limit.  This fee can vary greatly around the country, from tens to many hundreds of dollars.  It can be negotiable.  This fee is typically found in the state of Connecticut. 

DEALER HANDLING FEE  This is a fee a dealer may have at their discretion.  It does not reflect any particular cost (they may tell you otherwise), and depending on what state you're in, may have a state mandated upper limit.  This fee can vary greatly around the country, from tens to many hundreds of dollars.  It can be negotiable.  Dealers in CO and possibly other states tend to use fees with this name.  

DEALER SERVICES FEE  This is a fee a dealer may have at their discretion.  It does not reflect any particular cost (they may tell you otherwise), and depending on what state you're in, may have a state mandated upper limit.  This fee can vary greatly around the country, from tens to many hundreds of dollars.  It can be negotiable.  Dealers in FL and possibly other states tend to use fees with this name.  

DEALER TRADE  Also known as a dealer exchange (or DX), this refers to the process dealers practice of trading one vehicle for another in order to get a vehicle for their customer that is on another dealer’s lot (or incoming from the manufacturer to another dealer).  A “straight swap” is when dealers swap invoices one for one, so neither loses their “holdback” in the process.

DISTRIBUTOR  Some manufacturers have a middle man between them and the dealer, known as the distributor, who may add additional fees or physical add-ons that you will find on a local invoice in certain regions of the country.  An example of a distributor is Southeast Toyota, who covers distributing Toyotas in NC, SC, GA, FL, and AL.

DOCUMENT FEE  This is a fee a dealer may have at their discretion.  It does not reflect any particular cost (they may tell you otherwise), and depending on what state you're in, may have a state mandated upper limit.  This fee can vary greatly around the country, from tens to many hundreds of dollars.  It can be negotiable.  Dealers in CA, NY, NJ, MD, and various other states tend to use fees with this name.  

EXTENDED SERVICE CONTRACT  This is essentially an insurance policy meant to extend the length of the standard manufacturer’s warranty.  While they are meant to cover warranty items, they most always do NOT cover regular maintenance costs associated with owning a vehicle.  Furthermore, there are frequently disclaimers and deductibles that apply before the extended warranty comes into play.  Extended services contracts tend to be high profit margin items when sold by a new car dealership, so you may never get the benefit of making back what you pay for the contract even if you do use it down the road.  Car to Finish’s advice on this subject is to not buy one, as it’s usually not worth your while cost wise, unless you buy a horribly unreliable vehicle – which can be avoided with diligent research beforehand.

FINANCE DIRECTOR  The head of the finance department, usually one large enough to have several finance managers below them.

FINANCE MANAGER  The title for the person or people that work in the finance department of a dealership.  The finance department does a customer's paperwork once they agree on a price with the sales department.  They also handle financing, and selling a customer on other items that tend to have large profit margins for the dealership, such as extended service contracts, rustproofing, paint sealant, vehicle undercoating, fabric protection, or VIN (Vehicle Identification Number) etching.  In some case, they can also fill in for a sales manager to decide pricing for new vehicles in a pinch.

FLEET DIRECTOR  The head of the fleet department, usually one large enough to have several fleet managers below them.

FLEET MANAGER  A title for a manager in the fleet department, which may include several other fleet managers.  In smaller dealerships, there may be only one fleet manager, who would effectively run the department as well.  At other times, a fleet manager would defer to a fleet director or sales manager for final pricing, not having the power to decide on the spot.  Fleet managers historically handled customers who buy a certain number of vehicles per calendar year, although that has changed over time to include most any customer in the market for even a single new vehicle.  They can be anything from glorified salespeople to heads of departments.  When they are truly managers who can decide pricing for themselves, they may be more competitive than the retail sales department managers, because they are used to giving lower price quotes to customers who expect them from buying in volume.  They have been somewhat supplanted in recent years with the advent of the internet sales department, which also caters to individual customers looking for more competitive price quotes than on the traditional retail side.

FLOORPLANNING  The financing cost a dealer incurs on a new vehicle from the time they receive it from the manufacturer to the time it’s sold to the first buyer. The rate of financing is usually subsidized by the manufacturer for a period of time, usually 90-120 days.  Once that period ends, they carry much more significant costs to keep the vehicle there until it’s sold, so have more of an incentive to move vehicles before that point than after.  Ever wonder why a dealer is so eager to sell you a car on their lot vs. an incoming unit or one they have to get from a another dealer?  Now you know.

GENERAL SALES MANAGER  One possible title for the manager who runs the sales department.  Senior sales manager is another.

GENERAL MANAGER  A title for the manager that runs all departments of a dealership (i.e. sales, parts, service). The owner (also called the dealer principal) could also be the general manager.

INTERNET DIRECTOR  The head of the internet department, usually one large enough to have several internet managers below them.

INTERNET MANAGER  A title for a manager in the internet department, which may include several other internet managers.  In smaller dealerships, there may be only one internet manager, who would effectively run the department as well.  At other times, an internet manager would defer to a sales manager for final pricing, not having the power to decide on the spot.  Internet managers tend to be the recipient of internet based leads for their dealership, and can be anything from glorified salespeople to heads of departments.  When they are truly managers who can decide pricing for themselves, they may be more competitive than the retail sales department managers, because they are more accustomed to dealing with savvy customers who do more research and shop for price at multiple dealerships.

INVOICE  Also known as “dealer cost,” “wholesale pricing,” or simply “cost”.

LOCATOR  A computer that all dealers of a specific make are linked to so as to see the inventory of all other dealers.  This applies to in-stock or incoming vehicles.

MSRP (Manufacturer’s Suggested Retail Price)  Also known as “retail price””window sticker”, “sticker”, or “monroney” (named after Almer Stillwell "Mike" Monroney, who sponsored the Automobile Information Disclosure Act of 1958. The law required that all new automobiles carry a sticker on a window containing important information about the vehicle.)

MAKE (as in make, model and style)  This refers to the brand, or nameplate, of vehicle, whose name can also be the same as the manufacturer’s (as is the case for Ford, Honda, Chrysler, and Toyota). 

MANUFACTURER  This refers to the builder of  a vehicle, and may consist of one or several makes of vehicle.  Some examples are: Ford (Ford, Lincoln, Mercury, Volvo), General Motors (Chevrolet, Buick, Pontiac, GMC, Cadillac, Saturn, Hummer, Saab), Toyota (Toyota, Lexus, Scion), and Volkswagen (Volkswagen, Audi).

MODEL (as in make, model and style)  This refers to a specific vehicle name within a make, such as the Ford Mustang, Honda Accord, Chrysler Town & Country, or Toyota Camry.

PRICE Should represent the price you pay for the vehicle when all is said and done, but there is no hard and fast rule, unfortunately.

PROCESSING FEE  This is a fee a dealer may have at their discretion.  It does not reflect any particular cost (they may tell you otherwise), and depending on what state you're in, may have a state mandated upper limit.  This fee can vary greatly around the country, from tens to many hundreds of dollars.  It can be negotiable.  Dealers in VA and various other states tend to use fees with this name.  

PROTECTION PACKAGE  Another set of forced items like on an appearance package, although the mix of items may vary (or be the same), it may include:

  • VIN (Vehicle Identification Number) etching on the engine compartment
  • Trunk Tray (basically, a floor mat for your trunk)
  • Rust Proofing
  • Paint sealant
  • Vehicle undercoating
  • Fabric protection

Again, these are a source of profit for the dealer, and while some of them may not be removed physically, it’s possible to negotiate the price of them or get them free of charge as a condition for buying the vehicle (since the dealer chose to put them on mandatorily).

QUOTE (not a price)  When a dealer gives an amount they’d offer a vehicle for a vehicle.  This may not necessarily include all the costs you’d ultimately have to pay (i.e. state fees such as tax, tags, and title, or the destination charge/freight, or other miscellaneous regional fees or mandatory add-ons from the dealer).  It might also be the profit margin a dealer is committing to, sometimes phrased as an amount of profit relative to invoice or MSRP.

SALES MANAGER The title for the person (or one of a number of people) who work in the sales department and decide pricing on new vehicles.  They are usually the first level of management a salesperson goes to for approval of new vehicle pricing, and have varying levels of decision making ability depending on the size and mentality of the dealership.

STYLE (as in make, model and styleThis refers to the trim or equipment level of a particular model of vehicle.  Some examples are: Honda Accord 4dr EX Auto, Ford F-150 Supercab XLT 4WD, or Chevrolet Malibu LTZ.

VIN (Vehicle Identification Number)  This is a 17 digit number identifying your specific vehicle.  Each VIN is unique, and is like a social security number for your vehicle.  All vehicles legally residing in the United States have a VIN in multiple places identifying them.  With a VIN, you have the ability to look up a vehicle’s recorded history through sites like Carfax, although this should not be necessary when buying a new vehicle.

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