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Important Terms, Phrases, and a Who’s Who of Car Sales (Part 2)

This post is the second article in a two-part introductory glossary series. If you missed the first one, click here.

In this article, we review 25 important dealership terms and phrases.

Note that each line item has a corresponding article that takes a deeper dive into the term/phrase. These links will be published and updated as the articles are written.

25 Important Terms and Phrases

  1. Certified Pre-Owned (CPO) – Used vehicles that have undergone a rigorous inspection and meet specific criteria set by the manufacturer for quality and reliability
  2. Customer Satisfaction Index (CSI) – A metric used to measure customer satisfaction with a dealership’s overall experience, including sales, service, and customer support
  3. Destination Charge – The fee added to the vehicle’s price to cover the cost of transporting it from the factory to the dealership
  4. Down Payment – The initial payment made by a customer when purchasing a vehicle, which reduces the total amount financed
  5. Positive Equity – The positive difference between the current market value of a vehicle and the remaining amount owed on the loan or lease
  6. Financing – The process of providing funds to customers to purchase vehicles, often through loans or leasing
  7. Guaranteed Asset Protection (GAP) Insurance – Coverage that pays the difference between the outstanding loan amount and the vehicle’s actual cash value in the event of theft or total loss
  8. Inventory – The total stock of vehicles available for sale at a dealership
  9. Lease Buyout (LBO) – The option for a lessee to purchase the leased vehicle at the end of the lease term
  10. Lemon Law – A set of consumer protection laws designed to provide remedies to consumers who have purchased or leased a defective new vehicle, commonly known as a “lemon”
  11. Manufacturer’s Suggested Retail Price (MSRP) – The price recommended by the manufacturer for a new vehicle
  12. Market Value – The current fair price or estimated worth of a vehicle based on factors such as demand, supply, age, condition, and location
  13. Negative Equity – The situation where the amount owed on a vehicle loan exceeds the vehicle’s current market value
  14. Original Equipment Manufacturer (OEM) – The company that manufactures vehicles and sells them to dealerships
  15. Pre-Delivery Inspection (PDI) – An inspection conducted on new vehicles before they are delivered to customers to ensure they meet quality standards
  16. Rebate – An incentive offered by the manufacturer or dealership to reduce the purchase price of a vehicle
  17. Recall – A manufacturer-issued notice to address safety or performance issues in vehicles and provide necessary repairs or modifications
  18. Reconditioning – The process of preparing a used vehicle for sale, including repairs, maintenance, and a full detail
  19. Subprime Financing – Financing provided to customers with lower credit scores or limited credit history, typically associated with higher interest rates
  20. Term Length – The length of a finance or lease contract, typically expressed in months
  21. Test Drive – An opportunity for potential buyers to experience a vehicle before making a purchase decision
  22. Trade Allowance – The value assigned to a customer’s trade-in vehicle, which is deducted from the purchase price of a new vehicle
  23. Trade-In – When a customer sells their current vehicle to a dealership as part of a transaction to purchase a new one
  24. Vehicle Identification Number (VIN) – A unique identification number assigned to each vehicle, containing information about its specifications and history
  25. Window Sticker (Monroney) – A label affixed to the vehicle window, displaying information such as the vehicle’s features, specifications, fuel economy, and pricing

Want to see something added to this list? Send in a suggestion!

Now that we have a basic understanding of dealership structure, car sales terms, and the layout of this blog, let’s move on to the good stuff. Click Next to continue.