Auto finance can be complicated

Buying a car is a complicated process. It can be even more so if you don’t know the terms and haven’t the slightest idea what the salesman is talking about. There’s no reason for you to be kept in the dark; we will provide a list of commonly used terms that you may encounter when buying a car. In part one of this article, we covered terms such as base price and dealer incentives. We’ll continue the list below.

More below.

Buying a car has its own set of terms; it pays to know them

In part one of this auto finance glossary, we introduced a few basic terms that you may wish to know when buying a car, such as dealer preparation and Kelley Blue Book. Below are some more things you should probably acquaint yourself with before you head out to the dealer to buy a new car or truck.

• Invoice price - Often misunderstood by many (with the help of salespeople) to be the actual dealer cost, the invoice represents the initial amount that the dealer pays to the manufacturer for the vehicle. This price will include destination charges, but will probably not reflect the actual dealer cost, as the manufacturer usually pays a 2-3% “holdback” to the dealer at the end of the year. This price will also not reflect dealer incentives, such as rebates. You may get a good deal if you buy at dealer invoice price, but rest assured, the dealer is still making money.
• Rebate - Offered in times of slow sales, this represents a discount from the manufacturer to the dealer or customer. These may be redeemed in cash or applied to the down payment. You won’t usually find a rebate on popular vehicles; they generally use them to get the slow-moving items off of the lot.

• Sticker price - The price posted on the vehicle that shows the vehicle’s base price, the price of installed options, destination charges and any other adjustments to the base price. This sticker, required by Federal law, will also include details regarding the vehicle’s fuel economy. Like those tags on pillows and mattresses, these stickers may not be removed under penalty of law except by the consumer.
• Title - A legal document, issued by the state, containing information about the specific vehicle in question. It will generally list the make, model, vehicle identification number and the name of the owner. A car may not be sold, either new or used, without a title. If you move to another state, you will have to obtain a title from the state to which you move.
• Trade-in value - The amount of money that the dealer will offer you for your existing vehicle towards a new one. The price is generally less than the wholesale price of the car; you can probably do better to sell it yourself. Still, a trade-in, while not making the most financial sense, does eliminate the problem of selling the car, which most people would rather not do.
• Vehicle Identification Number - aka VIN - a number marked on the dash and other places of a car that uniquely identifies that particular car and distinguishes it from any other. Required by Federal law. This number will be shown on the title of the vehicle.

Knowledge of these terms should make potential buyers of cars and trucks a bit more comfortable when visiting an auto dealer.

If you own a car, van, or pickup truck, you should protect your investment. Vehicle insurance is expensive, but why pay a lot if you don't have to? InsureMe can produce a fast price quote from an insurance company in your area at a reasonable price.