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Auto Loans

Auto Loans Glossary

B
Blue Book value[skip to next word]

Refers to the Kelley Blue Book, a guide and website that lists suggested values for new and used cars.

C
Collision insurance[skip to next word]

Auto insurance that pays for repairing the damage to your car when you've been in a collision with another auto.

Comprehensive insurance[skip to next word]

Auto insurance that pays for repairing the damage sustained to your car in a non-collision accident. For example, theft, vandalism or bad weather.

Closed-end lease[skip to next word]

A lease that predetermines what the specific value of the leased item will be at the end of the lease, and the fees that may be due at that time.

D
Dealer charges[skip to next word]

Charges for features sold separately by an auto dealer, such as rust proofing, undercoating, extended warranties or additional options.

Dealer holdback[skip to next word]

The difference between the amount on the invoice and what an auto dealer pays the manufacturer. This difference can be 2% to 3% of the car's MSRP.

Dealer incentives[skip to next word]

Reduced-price programs that auto manufacturers can offer their dealers to boost sales of less popular models or reduce inventories. The dealers can then decide whether to pass these savings on to their customers.

Dealer invoice[skip to next word]

The amount that auto manufacturers charge dealers for new cars, including the options.

Dealer sticker price[skip to next word]

The Monroney sticker price plus the suggested mark-up for features the dealer installs himself.

I
Invoice price[skip to next word]

The amount that auto manufacturers charge dealers for new cars, including the options. Also called dealer invoice.

L

Buying your leased vehicle.

M
Monroney sticker price[skip to next word]

The information contained on the sticker that's taped to the side window of every new and used car offered by every dealer. It tells you the base price of the car, the options that are already installed, the freight charge, the MSRP and the fuel economy. Federal law requires the label and it is illegal for anyone to remove it other than the buyer.

An acronym for manufacturer's suggested retail price. The amount for which the manufacturer would like to sell the car.

N
New car dealer[skip to next word]

Buying a new vehicle from a franchise dealership. Franchise dealers sell new and used cars for auto manufacturers such as Ford®, General Motors®, Chrysler®, Honda® and others.

O
Open-end lease[skip to next word]

This lease leaves open the amount you may have to pay at the end of the lease term, as opposed to a closed-end lease. At the end of an open-end lease, you will have to pay the difference between the residual value and fair market value of the car, if the fair market value is lower.

P
Personal property secured loans[skip to next word]

Loans you take out to pay for an auto, boat or other personal property that will serve as collateral for the loan.

R
Reconditioning reserve[skip to next word]

An auto leasing term synonymous with a security deposit. This is a deposit you pay in the event a leased auto's condition deteriorates to a point where reconditioning is necessary.

Residual value[skip to next word]

The remaining value of your new car at the end of the lease term. It's also called book value and includes normal depreciation.

T
Trade-in value[skip to next word]

The dollar amount the dealer will give you for the car you now own as a down payment on the car you want to buy.

U
Used car dealer[skip to next word]

Buying a used vehicle from a franchise dealer or independent dealer. Franchise dealers also sell new cars for auto manufacturers such as Ford®, General Motors®, Chrysler®, Honda® and others. Independent dealers are not affiliated with an auto manufacturer and may sell many different brands of vehicles.