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
- Certified Pre-Owned (CPO) – Used vehicles that have undergone a rigorous inspection and meet specific criteria set by the manufacturer for quality and reliability
- Customer Satisfaction Index (CSI) – A metric used to measure customer satisfaction with a dealership’s overall experience, including sales, service, and customer support
- Destination Charge – The fee added to the vehicle’s price to cover the cost of transporting it from the factory to the dealership
- Down Payment – The initial payment made by a customer when purchasing a vehicle, which reduces the total amount financed
- Positive Equity – The positive difference between the current market value of a vehicle and the remaining amount owed on the loan or lease
- Financing – The process of providing funds to customers to purchase vehicles, often through loans or leasing
- 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
- Inventory – The total stock of vehicles available for sale at a dealership
- Lease Buyout (LBO) – The option for a lessee to purchase the leased vehicle at the end of the lease term
- 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”
- Manufacturer’s Suggested Retail Price (MSRP) – The price recommended by the manufacturer for a new vehicle
- Market Value – The current fair price or estimated worth of a vehicle based on factors such as demand, supply, age, condition, and location
- Negative Equity – The situation where the amount owed on a vehicle loan exceeds the vehicle’s current market value
- Original Equipment Manufacturer (OEM) – The company that manufactures vehicles and sells them to dealerships
- Pre-Delivery Inspection (PDI) – An inspection conducted on new vehicles before they are delivered to customers to ensure they meet quality standards
- Rebate – An incentive offered by the manufacturer or dealership to reduce the purchase price of a vehicle
- Recall – A manufacturer-issued notice to address safety or performance issues in vehicles and provide necessary repairs or modifications
- Reconditioning – The process of preparing a used vehicle for sale, including repairs, maintenance, and a full detail
- Subprime Financing – Financing provided to customers with lower credit scores or limited credit history, typically associated with higher interest rates
- Term Length – The length of a finance or lease contract, typically expressed in months
- Test Drive – An opportunity for potential buyers to experience a vehicle before making a purchase decision
- Trade Allowance – The value assigned to a customer’s trade-in vehicle, which is deducted from the purchase price of a new vehicle
- Trade-In – When a customer sells their current vehicle to a dealership as part of a transaction to purchase a new one
- Vehicle Identification Number (VIN) – A unique identification number assigned to each vehicle, containing information about its specifications and history
- 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.