Final

Question 1

Define: Sales Tax

Answer 1

Amount of tax paid on the price paid for the vehicle at the time of title and registration at the DMV. Tax is calculated on place of residence so tax will be collected for state, county and/or city.

Question 2

Define: F&I Office (Finance and Insurance)

Answer 2

Where you complete paperwork after purchasing car.

Question 3

Define: APR

Answer 3

Annual percentage rate; the annual rate of interest that is charged for using credit

Question 4

Define: As is

Answer 4

A car sold with no warranty. All repairs from the moment the vehicle is purchased are at the car buyers expense.

Question 5

Trade-In Value

Answer 5

The average price the dealership will give you for your old car when you buy a new car through them.

Question 6

Extended Warranty (Service Contract)

Answer 6

An additional form of protection that can be purchased to extend/enhance a manufacturer’s warranty.

Question 7

Lemon Laws

Answer 7

Laws that protect consumers from the consequences of buying a defective car with serious issues.

Question 8

Window Sticker

Answer 8

Required by law to be placed on every new vehicle that lists MSRP, options, fuel economy, etc. Also called the Monroney sticker.

Question 9

Recall

Answer 9

When a safety defect is discovered and the manufacturer is required to fix the problem at no charge to the owner.

Question 10

Registration

Answer 10

It is legally recording vehicle ownership with the Dept. of Motor Vehicles (DMV) for tax and licensing purposes. The certificate must be carried in the vehicle.

Question 11

VIN

Answer 11

Vehicle Identification Number, a unique coded used the auto industry to identify and track each vehicle manufactured.

Question 12

Title

Answer 12

Vehicle’s proof of ownership issued by the state’s DMV. A loaned vehicle’s title will be held by the lender (lien) until the loan is paid off. An owner can get a TOD (transfer of death) title.

Question 13

Down payment

Answer 13

Cash paid upfront when something is brought on credit to reduce the amount of the loan.

Question 14

Documentation fee

Answer 14

Charges intended to cover the cost of processing the paperwork involved in the sale of a car. Many fees charged by dealers are negotiable, and this one should be challenged as excessive if its more than $100.

Question 15

MSRP

Answer 15

Manufacturers Suggested Retail Price - the price the manufacturer is suggesting the vehicle be sold for. AKA: Sticker price, list price, sticker, or retail price

Question 16

Asking price

Answer 16

The price the seller of the car posts when advertising the car

Question 17

Base price

Answer 17

Cost of a vehicle with standard equipment before options and upgrades

Question 18

Dealer Invoice Price (Invoice Price)

Answer 18

Approximate price the dealer pays to buy the car form the manufacturer

Question 19

Blue Book Value

Answer 19

Estimated market or trade-in value of a used vehicle as calculated by Kelley Blue Book, Edmunds, etc.

Question 20

Commission

Answer 20

The amount of income the salesperson makes when they sell a vehicle

Question 21

Destination Charge

Answer 21

The transportation cost to get the vehicle from the manufacturer to dealership and the cost is passed on to the customer. Not included in the MSRP. AKA: Delivery charge.

Question 22

Options

Answer 22

Extras added to a vehicle beyond that standard equipment (sunroof, leather seats, navigation system, etc.)

Question 23

Incentives and Rebates

Answer 23

Any offer to car buyers, from the car manufacturer, to get customers to buy the car.

Question 24

Option packages

Answer 24

A package of extra options that the manufacturers will put together at a reduced price.

Question 25

Trim level

Answer 25

Commonly, the names are a combination of letters such as SE or LX, Limited, Denali, etc. Affects the level of standard equipment and MSRP.

Question 26

Private party value

Answer 26

The average price the vehicle sells for when not being sold through a dealership.

Question 27

Dealership prep fees

Answer 27

Charges, usually negotiable, are added to the purchase price of a new car to cover the cost of preparing the car for sale such as removing plastic, cleaning, adding fluids, etc.

Question 28

Dealer holdback

Answer 28

A small percentage of a vehicle’s cost that a manufacturer pays back to a dealership after the vehicle has been sold. This is what allows dealerships to sell vehicles at invoice price or below and still make a profit.

Question 29

Automobile insurance

Answer 29

Provides payments for both liability and property insurance on a vehicle

Question 30

Claim