Ultimate Automotive Glossary - Common Terms Used in the Car Business

Ultimate Automotive Glossary - Common Terms Used in the Car Business Administration Fee – Administration fee is often charged by the car dealership. It covers different “office” costs that are linked to selling the vehicle and it may include fees for licensing, plating, vehicle preparation, and others. Administration fees are not mandatory and customers may argue them. Occasionally, the administration fee would be included in the sale price. Many dealers do not charge them as they are considered as unethical.

Bait & Switch – Baiting is related to the dealer advertising the vehicle on an alternative price and by this inviting the customers for a test-drive. Sales stuff them present a different product at a higher price. In a nutshell, potential buyers are “baited” into visiting the dealer and then they are “switched” to a more expensive vehicle model. Customers may argue the strategy as it is illegal and the dealer has to be able to show and provide the vehicle model that is advertised for sale.

Bond/Bonded – A bonded dealership or a company is your guarantee that the company and all the employees are following and complying with the governing-body regulations and that the company has been declared financially stable. All customers should look for and shop from bonded companies and dealerships only.

Certified Used Car – Certified used cars are inspected before the sale at the dealership’s expense and they are certified with a condition that makes them good for selling. Certified used cars are inspected by a mechanic, who can guarantee that the vehicle for sale is meeting at least the minimum standard of quality, condition, appearance, etc. These vehicles usually carry a supplemental warranty.

Cooling-off – The cooling-off period starts right after the customer is signing the contract. After a used car purchase, there is a certain period of time and during this time the customer has the right to return the vehicle for a refund or to cancel the contract without any penalty.

Contract – Signing a contract means that both parties, the dealership and the customer, are agreeing under legally-binding conditions on the sale/purchase of the used vehicle. Some contracts have a cooling-off period, while others become active once the contract is signed and the first deposit is made.

Curbsiders – Curbsiders are people, who pose as private sellers of used vehicles, but they are in fact part of a business of selling cars. Making a deal with a curbsider could be risky because in most cases they are selling less than desirable vehicles and they do not provide the customer with accident history, liens, etc. You can easily spot the curbsiders by checking whether the ownership is in their name.

Dealer – A dealer or a dealership is every business that is involved in selling new vehicles, used vehicles, or both.

Deposit – Deposit is the sum of money that a customer gives to a dealer so a certain vehicle for sale is “hold” or “secure” for the buyer to purchase it later. Some dealers ask for a deposit so they can secure the vehicle until the buyer secures complete financing.

Extended Warranty – The extended warranty is an “extra” one that is available above and beyond the manufacturer’s warranty. It includes extended coverage of certain systems and components that are not covered by the manufacturer’s warranty. The extended warranty is often sold at an additional cost by the dealership or a third party.

Inspection – Inspection is performed by the potential buyer prior to purchase and signing a contract and it is the physical and mechanical verification that the vehicle is in the exact condition as it is advertised/described by the seller. The inspection can also be performed before the vehicle is “certified” for a sale by the dealership. In this case, the inspection is performed by a mechanic, who can verify that the vehicle meets the minimum standard of quality, condition, and appearance.

Latent Defect – The latent defect or problem is the one that would not likely be discovered during a reasonable inspection by a mechanic prior to the vehicle being certified for sale. The problem is also known as a “material defect”.

Legal Obligations – Legal obligations require the involved party to be and do legal business. In a case of the unfulfillment of the obligation, a penalty could be incurred.

Lien – In the common case, the lien is put on a vehicle by a financial institution that lends money to a car buyer. The lien is not removed until the vehicle is paid in full. The buyer holds the title to the vehicle and uses it. The lien holder may be able to seize the vehicle if payments are not made in full, even if the owner sells the vehicle.

Low-ball – Low-ball is a strategy often performed during negotiations by the potential buyer. The potential buyer is offering the seller an amount of money that is significantly lower than the original price the vehicle is sold for. By this, the buyer is checking out how much the dealer/seller is willing to decrease the price. In case that a car owner is selling a used vehicle to a dealership, the dealer can also perform a low-ball on the trade-in value.

Market Value – The market value is assigned to a good or service with the current market conditions as a guide. Determining the exact market value in the case of used cars is a bit more challenging as it is affected by a number of factors such as the condition of the vehicle, mileage, demand, etc.

Ownership Costs – Ownership costs include all costs of owning a vehicle for a period of time and usually include insurance, fuel, maintenance, etc.

Private Seller – A seller of a new or used vehicle that is not part of a business or a dealership and not a professional. Private sellers often list the vehicles they are selling on different platforms and websites dedicated to used car listings and advertising.

Salvaged/Rebuilt – Rebuilt or salvaged vehicles are the ones, which has been damaged and returned to an operational state. In the common case salvage vehicles are the ones that have been in a serious accident and very damaged and they are later repaired for a resale.

Recall – If a problem with a vehicle is discovered after it has been produced, the manufacturer will recall the vehicle in order to fix or remedy the problem. Recalls are typically applied to vehicles that are discovered to have safety-related issues and they are carried out free of charge.

Recourse – Recourse is related to a change in the opinion of the customer in the case of difficult or legally-implicated situations. In the case of a major problem, sometimes legal action is the only recourse possible.

Trade-in – Trade-in happens when a private seller is trading a vehicle to a dealership for a pre-arranged amount of money that is usually put towards the purchase of a new vehicle.

Unadvertised Fees – Unadvertised fees, as the name suggests, are not mentioned in the advertisement of a vehicle and its sale price. Unadvertised fees often include administration fees, licensing fees, etc.

Vehicle History Report – The additional report can be issued at an extra cost and includes information about the vehicle’s identification number, any accidents, damages, and repairs in the vehicle’s past, the number of former owners, potential salvage or rebuilt title, whether the vehicle was used commercially. Alternatively, you can use the vehicle’s identification number and some online tools or the government’s website to receive information about the vehicle’s history for free. You can check the MOT history of a vehicle by visiting the government’s website.

Vehicle Identification Number (VIN) – This is the “serial number” of a vehicle that can be found imprinted on various locations in the vehicle. The VIN identifies the vehicle’s engine, manufacturing location, brand, and other information. The VIN is used for identifying the vehicle to authorities.

Warranty – Warranties are issued by the manufacturer and also can be issued by a company that sells warranties as a guarantee for certain vehicle parts, systems, components. In case that the covered systems, components, and parts fail or require a replacement within a given period of time, the warranty guarantees that they will be replaced at no cost or at a reduced price.

Write-off/Total Loss – The title that the authorities give to a vehicle that is damaged to a point where it is not financially viable and reasonable to return it to its original and functional state.
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