Every occupation has a jargon–words and phrases well known to people in the field but largely gibberish to an outsider.
As linguists discovered long ago, learning the meaning of occupational terms can reveal far more about the speakers’ lives and strategies than the words might suggest. In the late 1930s, for instance, linguist David Maurer began a study of the language used by confidence men. Titled “The Big Con,” the book that resulted became one of the best descriptions of the con man’s milieu.
Doctors have one set of words, lawyers another. So do waitresses, truckers, cab drivers–and salespeople, be they hawking computers, clothing or cars.
And with selling cars, different lingo goes with each phase of the operation. Some words might come up in the sales encounter. Others apply to the contract. And then there’s leasing. Here’s a sample:
The deal
Add-on: Accessories or services, such as a higher-end sound system, special floor mats, rustproofing, undercoating, pinstriping, added by the dealer that raise the price. These items may be listed on a separate window sticker, posted near the Monroney label.
Base price: The basic cost of a model with no options. This figure is printed on the Monroney label, along with the price of the vehicle as equipped with factory options.
Dealer markup: Typically considered to be a raise in the price of a vehicle for extra profit. This may occur when a model is in especially high demand.
Dealer prep (preparation): An add-on charge that many dealers include in sales contracts–with the blessing of state officials–though manufacturers pay dealers to prepare their vehicles, which can include anything from routine cleanup to installation of components such as license plate brackets.
Delivery: Turning the prepared vehicle over to the customer. This might occur immediately after sales documents have been signed or within hours or days.
Demo (Demonstrator): An automobile provided to a salesperson for personal and business use, often sold to customers when service as a demo is done.
Deposit: An amount paid to the dealer to cement an agreement that the dealer will sell a specified vehicle to that customer for a stated price. When final paperwork is completed, the deposit is usually applied to the down payment.
Destination charge/freight: A sum to cover shipping costs from the factory or port of entry. The amount varies among car models, but it’s the same for customers in any region so there’s no advantage in buying from a dealer near the factory.
Extended warranty/service contract: An agreement to cover specified repairs after the basic manufacturer warranty has expired. It is available from manufacturers, dealers and independent firms.
Holdback/dealer holdback: A small allowance, typically 2 or 3 percent of the manufacturers suggested retail price, most manufacturers give the dealer after a car has been sold. Because of holdback, a dealer could sell a vehicle for invoice price or slightly less and make a profit.
Incentives: Amounts paid by a manufacturer to the vehicle buyer in the form of cash (supplied after the sale) or low-interest financing. Some incentives are offered to the dealer to be used to stimulate the sale of slow-moving vehicles.
Invoice/dealer invoice/dealer cost: The amount the dealer paid for the car. Many consumers seek this figure from a price guide before negotiating the purchase price.
MSRP: Manufacturers suggested retail price, the list or sticker price of a new vehicle and its options and freight as posted on the window sticker. Most vehicles are sold for less than this amount; a few high-demand vehicles sell for more.
Monroney: The window sticker named for U.S. Rep. A.S. “Mike” Monroney, an Oklahoma Democrat who led the fight to require such labeling in 1958. The law took effect in 1959.
Trade-in value: The amount a dealer will give you for your old vehicle to be applied to the price of the one you’re purchasing.
Financing
Amount financed: The “principal” or total sum of a loan. This can include the cost of the vehicle (less down payment), an extended warranty and credit life insurance.
APR: Annual percentage rate, the yearly interest rate that applies to a loan. Lenders must disclose the APR so customers can compare offers.
Balloon payment/balloon loan: A loan with a final payment that is much larger than the previous monthly ones.
Captive/captive finance company: A finance company that’s connected to a manufacturer or dealership, rather than independent.
Credit life insurance: Optional insurance that pays an auto loan if the purchaser becomes disabled.
Depreciation: The decline in value of a vehicle through its life. Depreciation is greatest in the first part of vehicle life, beginning as soon as the car is driven away from the showroom.
Down payment: The sum paid in cash, plus trade-in. A larger down payment reduces the amount to be financed and interest to be paid.
Payment term: The length of the loan in months.
Upside-down: When a person owes more on his or her car than it’s worth. Buyers can stay in this state for years, and delaying an initial monthly payment or making a small down payment can extend that length of time.
Leasing
Acquisition fee: A charge to originate some leases. Can be incorporated into the “capitalized cost” used to calculate monthly payments.
Amount due: Similar to a down payment on a financed vehicle, this is the sum to be paid when signing a lease. This might include a capitalized cost reduction, registration fees, security deposit and the first payment.
Capitalized cost/cap cost: The negotiable leasing equivalent to the selling price of a purchased vehicle. A lower cap cost, achieved with a larger down payment, reduces monthly payments.
Closed-end lease: A standard auto lease. The lessee can return the vehicle at the end of the term and pay end-of-lease charges. Terms are based on the vehicle’s anticipated value, but the lessor assumes the risk of miscalculating the figure.
Cost of money/money factor: The negotiable leasing equivalent of an interest rate paid when purchasing a vehicle.
Disposition fee: An extra fee, which can be negotiable, charged by some lessors for returning the vehicle at the end of the lease. It should be stated in the lease agreement.
Early termination charge: An amount that must be paid if a leased vehicle is returned before the end of the term.
Excess mileage fee/mileage limitation: The sum charged if you drive a leased vehicle more than the negotiated number of miles. A typical lease allows 12,000 to 15,000 miles per year.
Gap insurance: A form of insurance that pays the lessor the difference between the amount paid and the vehicle’s value if it’s destroyed or stolen.
Lease: A written agreement allowing use of a vehicle for a specified amount of time (typically two to five years). Essentially, the lessee is paying for estimated depreciation over the lease term and certain extra charges.
Lessee: A person who leases a vehicle. Lessees generally are responsible for repairs, maintenance and insurance coverage.
Lessor: The person or organization that grants a lease and provides the vehicle.
Open-end lease: This type lets the lessee assume the risk of any difference between the estimated and actual value of the vehicle at the end of the lease. Because of the additional risk, monthly payments generally are lower.
Purchase option: A provision that allows the lessee to buy the vehicle at the end of the lease, typically by paying the residual value.
Residual value: An estimate of what a new vehicle will be worth at the end of the lease. Lessors base lease payments on residual value, which may be expressed as a percentage of the original price or in dollars.
