Common Car Buying Terms and Questions
When you're preparing to buy a vehicle, it's important to educate yourself. Knowing common car buying terms and questions to ask can allow you to make an informed decision and avoid any mistakes. Here are a few common car buying terms and questions.
The following terms are important to understand and be aware of when looking to purchase a vehicle:
Blue Book Value - If you currently own a vehicle that you plan to trade-in at the dealership, you'll hear this term. Blue Book is a reputable used-car pricing guide that has been around since 1926. It determines what your vehicle is valued at and how much you can get in return when the dealership acquires it.
Down Payment - The down payment is the amount of money you pay to the dealer to reduce the amount of the original loan, which then influences your monthly car payments. In some cases, down payments are not required and other dealerships even offer a $0 down program to buyers who qualify.
Drive Off - Also known as Total Due at Signing, this term defines the amount of money that a borrower must pay to obtain a new vehicle and get the keys. The amount can also include your down payment, title, sales tax, and doc fee.
Extended Warranty - The extended warranty covers the service and repairs on the vehicle you're purchasing for a specific period. It allows the dealership to earn more money and can offer peace of mind to drivers if any issues occur during the first few years of owning the car.
Interest Rate - When you obtain a loan through the dealership and borrow money for your new vehicle, the loan will come with an interest rate. The interest rate is influenced by your credit score.
MSRP - MSRP is the Manufacturer's Suggested Retail Price and is what the automaker suggests the dealership list the vehicle for at their location. The dealership has the final decision on whether or not to sell a particular vehicle for more or less money.
Frequently Asked Questions
What incentives are you offering?
Ask the dealership if they're offering any incentives like rebates or extended warranties when you decide to lease or buy a vehicle.
Can you reduce the price?
Negotiating the selling price is part of the car buying process to ensure you get the best deal. Research the vehicle's invoice price before you start to negotiate.
Are tax credits available?
Tax credits are often available for plug-in hybrids or electric vehicles to help you save on the cost of the vehicle. The dealership will inform you of federal tax credits you can take advantage of when selecting a specific model.