Buying A New or Used Car? Know These Car-Buying Terms First
When you’re buying a used car or a new car from Harrisonburg car dealerships, there are car-buying terms that’s important to know. At Joe Bowman Auto Plaza, we want you to be as informed as possible about purchasing a vehicle.
That’s why we’ve compiled a list of the less common terms used when buying a car orleasing one
Leasing Terms and Fees
Lenders charge this fee to dealers to finance your lease. This fee is passed on to the buyer. Because there is no negotiating room with lenders, dealers rarely have the opportunity to negotiate this fee with the buyer.
This is most common type of car lease. There is an agreed upon term, usually 36 months. At the end of the lease, the lessee has the option to purchase the vehicle at a value that was agreed upon before the beginning of the lease. Or, the vehicle can be returned to the dealership without further cost or liability.
Also called the termination fee, this expense is hardly ever negotiable. It’s commonly charged by finance companies at the end or the termination of a car lease and covers the prep of the released vehicle for the next sale.
Sometimes called the Total Due at Signing, the drive off fee is the amount the lessee or buyer pays to take possession of the vehicle and drive it off the lot. If you are purchasing a vehicle, the drive off fee will include your down payment, doc fee, sales tax and title. For lessees, the amount includes down payment, your first month’s payments, sales tax, title, and acquisition fee.
Early Termination Fee
This is a penalty fee charged when a lease is terminated early. If gap insurance isn’t purchased, the early termination fee could be applied if the vehicle is totaled or stolen.
Excess Wear Charge
These are common fees that are paid at the end of the lease to cover excess wear or mileage. This could include damage to the paint, wheels, or body. If the lessee has modified the vehicle in any way, such as with aftermarket wheels, lowered suspensions, or tinted windows, this could result in an additional charge. If the lessee removes them, then no charge is incurred.
This is the depreciated value of the vehicle at the end of the lease. Residual value is used to predict the vehicle’s value at the end of the contracted lease. Ultimately, it’s the overall cost of the lease. Non-negotiable, residual value is set by the leasing company or the bank.
Lesser Known New Car and Used Car Buying Terms
Dealer Addendum Sticker
When dealer modifications are added to a new vehicle such as aftermarket wheels and undercoating, these features increase the asking price above the MSRP (Manufacturer’s Suggested Retail Price). You’ll find these charges on a secondary window sticker.
Also called a doc fee, this is the charge by the dealer to cover paperwork processing. A negotiable charge, it varies by state.
F & I
This is the Finance and Insurance office at the dealership. All paperwork is completed here to finish the transaction.
Optional and additional, gap insurance extends beyond collision insurance. Insurance policies pay for the cost of the vehicle’s replacement, not its actual value. That means, if the vehicle is new, there can be a gap between the amount owed and what insurance will pay. Vehicles that have very high depreciation are a good match for gap insurance.
Named for Almer Stillwell “Mike” Monroney, an Oklahoma US senator who sponsored the legislation in 1958, this is the window sticker that shows the MSRP. It also shows the would-be buyer fuel mileage, country of origin, and other useful information.
Vehicles have a variety of trim levels which affect the level of standard equipment as well as the MSRP.
For example, SE or LX. Higher level trim models are more expensive and may also have extra standard equipment than lower trim levels.
This is a slang term which is also called being under water. It refers to a car owner thatwebsite owes more than a car or truck is worth. For instance, if you total your car before the loan term is up. Or, you decide to sell your vehicle before the completion of your loan.
When you’re ready to buy a new or used car, use the list above of car-buying terms. As a highly recommended dealership in Harrisonburg, VA, Joe Bowman Auto Plaza believes informed buyers make the most satisfied and happiest buyers. Learn more about us on our website.