Available Makes

30 Car Buying Industry Terms Every Buyer Should Know

manufacturers suggested retail price

Whether you’re buying a new car or a used one, it’s important to understand common car lingo.

Car sales jargon can be very confusing, especially if you’re a first-time car buyer.

By understanding the lingo, you can negotiate better prices, walk away with the car you want, and feel more confident you’re not getting the raw end of the deal.

Start today by reading our guide on 30 car buying industry terms we believe every car buyer should know.

Ace

A car salesperson term that describes a customer who purchases a car after the first offer.

Ad-Buyer, Paperboy.

A term describing customers that walk into car dealerships with a printed copy of the car advertisement. They’re looking to buy the car at the price in the ad.

Additional Dealer Markup (ADM)

ADM, also known as additional dealer profit (ADP), is an extra markup the dealer adds on top of the current price. You often find the term ADM or ADP next to the MSRP sticker. These acronyms tend to appear when a model is in high demand.

All-new, redesigned, refreshed

You might hear these terms often, or even interchangeably at car dealers. There are no federal or industry-related guidelines for using these labels. Their meaning often changes between dealerships and brands. As a general guide, the term “all-new” is often associated with models that haven’t been seen before. The term “redesigned” means an older model rebuilt with a new design. The term “refreshed” is usually applied to vehicles that have notable changes but are short of a full redesign.

Annual Percentage Rate (APR)

APR is also known as finance rate. It’s the interest rate on a loan and is expressed as a percentage of the amount borrowed.

Beater, iron, and Sled

Car salesperson terms used for busted, non-functional vehicles.

Blue Book Value

kelley blue book

Short for The Kelley Blue Book — a respected used-car pricing guide. You can check car prices if you’re buying or selling new or used vehicles.

Chisler

Car salesperson lingo used for customers who are skilled at negotiation

Dealer Addendum Sticker

car dealer addendum sticker

Many dealers will add extra modifications to cars. These mods include aftermarket wheels, undercoating, and added features. If you see a dealer Addendum sticker, you can expect the price to be above the MSRP. You will see this as a secondary window sticker (called the addendum sticker).

Dealer Incentives

Vehicle manufacturers often offer special deals and discounts to dealers, who can then pass on these discounts to car buyers. You may find these incentives appearing during seasonal sales or on slower-selling models.

Dealer Prep and Advertising Fees

Some dealers will charge you an additional $100 to $400 for preparing the vehicle for sale. They may mention that it is a pre-sale service and publicity fee. You can often negotiate the fee before purchasing the car.

Destination Fees

A shipping fee that manufacturers charge dealerships to transport the car from the factory to the dealer lot. This fee often range between $825 and $1,250. All dealers will pass the cost to the consumer. The fee is generally listed on the MSRP window sticker and will likely be included in the vehicle invoice.

Documentation Fees

The amount a dealer charges to finish the paperwork related to the selling and purchasing of a vehicle. The paperwork includes sales contracts and filings. These fees can range between $55 and $700 and are generally non-negotiable. Some states can limit the dealer documentation fee, while others have no maximum amount.

Down Payment

When you pay cash upfront to reduce the total loan and monthly payments. You might not need a down payment if you have a good credit rating.

Drive Off

The total amount you need to pay before you can own the vehicle and drive it off the dealer’s lot. The drive off is also known as the total due, which includes the down payment, document fees, sales tax, and title fee.

Extended Warranty

The extended warranty will cover any repairs or services that go beyond the vehicle’s factory warranty. It is also known as a service contract and is generally extremely profitable for the dealer. We recommend that you do your research if you want to purchase an extended warranty.

Factory Incentives

car factory incentives

Factory incentives are different from dealer incentives. They are cash-back rebates that apply only to new cars and come from the automaker straight to the customer. They’re also known as factory or cash-back rebates.

Five-Finger close

Car salesperson lingo to describe a technique where a salesperson hides a portion of the contract from the customer with their hand. The idea is to get the sales paper signed by the customer without them realizing the changes to what was verbally agreed.

Gap Insurance

gap insurance for cars

Optional, additional insurance that goes beyond your collision insurance policy. If you were to damage your new car, insurance policies would only pay the replacement cost of a vehicle. They won’t pay you its actual value and what you owe on the car. Gap insurance covers the gap between the depreciated value and what you owe on your car loan. We recommend checking with your regular insurance company first about gap insurance rates. Dealers won’t often give you the best deals. So do your homework.

Hammer

Car salesperson slang used to describe placing pressure on a customer to get them to purchase a vehicle.

Limited Warranty

A warranty covered by the manufacturer. These warranties are limited in terms of length of coverage, the extent of coverage, and who can use it. Limited warranties tend not to cover items that wear out quickly (such as tires and wiper blades).

Low-baller or Tire-Kicker

Car salesperson lingo describing customers who waste the dealer’s time with unreasonably low offers for vehicles.

Monroney Sticker

monroney sticker

The Monroney sticker, also known as a window sticker, is a label that contains basic information about the vehicle. The information includes the MSRP, fuel economy ratings, and general features.

MSRP

manufacturers suggested retail price

The acronym stands for Manufacturer’s Suggested Retail Price. It is the price the automaker recommends the dealer charge for the vehicle. It is, however, up to the dealer whether they charge more or less than this figure.

Rebate

An incentive offered to customers, where the dealer returns a fixed amount of money to the buyer. Rebates range between $500 to $3,000.

Subprime Loan

A type of loan given to high-risk individuals who don’t qualify for prime rate loans. These individuals tend to have poor credit histories and low credit scores. Subprime loans have higher interest rates and require larger down payments.

Test Drive

A car salesperson term to describe the moment when a customer takes a car out on a drive to see if it meets their driving requirements.

Title

The title, while commonly known as a pink slip, is the vehicle’s proof of ownership issued by the state’s Department of Motor Vehicles.

Trade-In

When you sell a vehicle to the dealer to negotiate the purchase of another car. The dealer will subtract the price of the sold car from the cost of the new car. The trade-in, however, values the sold car at wholesale prices, so the value tends to be less than if you sold it to an individual.

Trim Level

A trim level, also known as trim package or grade, is a version of the vehicle that comes with a set of combination of features. A higher trim comes with better features at a higher price, whereas a lower level trim may come with the basics at a lower cost.

If you’re looking to buy a car, then make sure you understand these key terms. It’s not a pleasant experience to be bombarded with car sales jargon. If you come prepared, you’re more likely to walk away with a better deal.

Read our car buying guide.