Auto Dealership

Credit Score

"FICO Score". This number provides potential lenders with the means to evaluate credit risk quickly & in a relatively objective manner

Extended Warranty

"Service contract" is is an agreement to cover certain specific service and repairs beyond the life of the factory warranty

PDI

1) Physical Damage Inspection - Insurance policy the F&I department might sell to customers. 2) Pre-Delivery Inspection - when the service department prepares a vehicle for delivery to the customer.

Special financing

1. High-interest loans for customers with poor credit. 2. Low-interest loans underwritten by the manufacturer

Spot Delivery

1. When all phases of the purchase and delivery are completed the same day. This may be with or without any kind of credit check or approval. 2. Any sales individual, be it salesman, sales manager, or Sales Business Manager, in reflecting his ability to do his required job

Destination Charge

Amount charged for transporting new cars from the factory to the dealership. Is on the dealer invoice and is not negotiable, but you should never pay any added fee tacked on by a dealer, unless you've requested and agreed to such a charge for a vehicle that must be transported a long distance from another dealer

Gross

Amount of profit

capitalized cost reduction

Anything—down payment, a trade-in—that reduces the amount financed through a lease.

Ad car

Basic car with few options (used to draw customers into the dealership with a low price and/or low payment)

Warranty

Basic guarantee that comes with a new vehicle.

Repo

Car that's repossessed for non-payment of a loan

Loaded

Car with every option. Could also mean a wealthy customer

Credit Report

Contains financial history information about a person. It focuses on payment obligations, current balances, such as amount of available credit, & public records like bankruptcy

Gap Insurance

Covers the difference between a vehicle's depreciated value in a loan or a lease and the amount owed on it in case it is stolen or totaled, a difference the owner or lessee would otherwise have to pay the lessor

Bureau

Credit report in a customer

Closed

Deal is done and the customer agreed to purchase the vehicle

Service Drive

Dealerships service department. Specifically used to identify the front-end where the advisors greet customers and inspect their vehicles. The shop is where the technician actually work in the vehicles

Twenty Group

Group of dealerships of similar size and market that is informed by the manufacturer. Dealers within a twenty group share financial and performance information for comparison purposes. Twenty groups also hold regular meetings to discuss common concerns

Tag (Hat, Block)

Identifier put on a vehicle when it comes in for service

Early Termination Fee

If for some reason the consumer is compelled to break the lease, the consumer will almost certainly be obligated to pay this fee

Reserve

Income a dealership realized on a contract in excess of the finance source's discount rate

NADA

National Automobile Dealers Association

Green Pea

New salesman

Tire Kicker

Normally someone who doesn't want to buy a car and just wants to look. They walk in, touch the merchandise, and don't talk to anyone

Recall

Notice by a manufacturer to the dealers and owners of a defective/unsafe vehicle or vehicle component

F&I Office

Office in a dealership in which vehicle purchase contracts are prepared and signed. Addition services like insurance or extended warranties may be offered to the purchaser

RDR(Retail Delivery Report)

Official registration of a new vehicle with its manufacturer

Junker

Old car ready for the scrap heap

Bird Dog

One who refers prospective customers to a particular dealership or salesman for a given fee or compensation

Warranty RO

Order for service repairs covered by a warranty plan; customer is not responsible for payment of the warranty maintenance; manufacturer reimbursed the dealer

OEM

Original Equipment Manufacturer

Buried

Owes too much on their trade (negative equity)

Rebate

Partial refund on a new car purchase offered by the manufacturer or dealership in order to increase sales. Can either be deducted from the purchase price or refunded by mail after the sale has been cimpleted

Accessories

Parts that add comfort, convenience, appearance, or safety to a vehicle

Fixed Operations (Back End)

Parts, service, and body shop departments

Lot Lizzard

Person who walks around the lot, never steps into the dealership, and never buys anything

Service Advisor/writer

Person who writes the initial RO for the customer on the service drive

Numbers

Price of the vehicle

Up

Prospect or fresh customer on the lot

Be-Back

Prospective buyer who has been in the dealership once or several times without making a purchase and promises that they'll be back

Buy Rate

Rate at which a car dealer acquired financing. The dealer can profit by offering the financing to a consumer at a higher cost and keeping the difference

Blue Book

Refers to the Kelley Blue Book value, an industry guide to dealers use to estimate wholesale & retail vehicle trade-ins or used cars. Can actually refer to a price looked up in one of the many guides to pricing

Back End

Refers to the amount of profit made from financing the vehicle at the dealership (reserve, credit insurance, gap insurance or extended service contracts)

MSRP

Represents the manufacturer's recommended selling price for a vehicle and its options

Unwind

Reversal of a car deal

Cherry Picking

Sales person that only takes customers that look or act like potentially easy buyers

End-of-Month

Series of activities performed to compile and process data needed to generate monthly reports; one result of these activities is the dealership's financial statement that is sent to the manufacturer

Internet Repair Order

Service performed on internal vehicles; charged to the department within the dealership requiring the work; often used to get vehicles ready to sell

Mouse House

Slang term used for a finance company

Third Baseman

Someone who accompanies a prospective buyer because the buyer feels they are better versed in haggling over the price of the car, and knows more mechanically, thereby decreasing the chances of getting stuck with a "lemon" or paying too much for a vehicle

Dealer Incentives

Special offers from car manufacturers to their dealers—which are usually passed on to the customer—to encourage sales in a slow market or when excess inventory builds up.

Holdback

Specified amount of money above the dealer's cost that domestic auto manufacturers keep for each new vehicle sold; held by the manufacturer for a specified period of time and then reimbursed to the dealer; treated as a savings account and "borrowed" from the manufacturer in times of cash-flow problems

Customer Satisfaction Index (CSI)

Term used in dealerships to cover anything relating to customer satisfaction; monitored by the manufacturer

Dealer Invoice

The amount a manufacturer charges its dealers for a car.

Absorption Rate

The amount of the dealership's total expenses covered by the profits from the fixed operations departments if the dealership(parts, service, and body shop).

Upside Down

The car's true value is less than the amount owed on the vehicle

APR

The cost of credit expressed as a yearly rate

BK

The customer has a bankruptcy in their credit history

Term

The length of a loan, usually stated in months

Front End

The new and used vehicle sales, F&I, leasing, and rental departments of a dealership

T.O. (Turnover)

The procedure used in selling where the salesman turns a prospective buyer over to another salesman or sales manager to close the sale

Pack

There are two interpretations. 1) used in figuring a salesman's commission, depending on the individual dealer they will deduct anywhere from $75 to $250 from the gross profit of the deal and pay the salesman his commission figured on this difference. 2) when the salesman or sales business manager would quote a monthly payment to a customer and increase the actual amount by 5 or 10 dollars to leave room for Credit Life; Accident and Health Insurance

Switch

To change a customer from buying one car to another for several reasons: availability, possible profit, etc.

VIN

Unique serial number used to identify each automobile

D. O. C. Daily Operating Control

Used mostly by the General Manager, this is a report detailing financial metrics of the dealership. Provides an at-a-glance summary of a dealer's gross profit and expenses for every department within the dealership

As-is

Used or pre-owned car sold without any type of warranty

Money Factor

Used to determine the lease rate. For all intents and purpose it is the lease equivalent of the interest rate in a conventional loan

Cream Puff

Used vehicle in excellent condition

Certified Pre-Owned

Used vehicle offered for sale by a franchised dealer for that vehicle make & who follows the manufacturer's requirements for "certifying" the vehicle & which, upon sale, is accompanied by a manufacturer-backed warranty

deskman or desk

Usually the new car or used car sales manager who both figures and determines what kind of deal the dealership will make to a customer

Limited Warranty

Vehicle warranty that is in effect for a specified number of years and/or miles driven

Lemon

Vehicle with numerous past and present mechanical problems that can never seem to be repaired properly

Program Car

Vehicle with typically less than 10,000 miles. Either driven by employees, OEM executives, rental companies or service loaners. Allows dealer to prorate price because of miles, sometimes can still be sold as a "new" car with full warranty and benefits. Also known as a Demo Vehicle

MPG

Vehicles fuel economy is determined by a number of factors including the size of the engine, the type of carburetion used, the weight of the vehicle, the type of transmission used, the final drive ration, the size and type of tires used, and tire inflation

Mini

When a car is sold at a very low profit and the sales person's commission is a minimum flat fee

Bait and Switch

When a customer is told something and then they are told something contradictory later in the sales process

DMV Fees

When buying a new car, you must have it registered & pay for the license plates before you can drive it away. May also be referred to as tax, title, and license fees or TT&L

Home Run

When maximum profit has been made on a deal, or when the F&I manager has sold the customer all the insurance he has available

Down Payment

When someone buys a car, and finances it through the dealership, they usually required to make a down payment of cash. This is credited against the balance of the loan.

Appraisal

When the used car manager values the trade-in

OAC

on approved credit

Closer

usually a more experienced salesman whose job it is to close the deal with the customer when the customer hesitates when dealing with the salesman.

Dealer Trade

when car dealers trade a new vehicle between them for a customer.

WAC

with approved credit

Teaser

A basic car with few options (used to draw customers into the dealership)

Credit

Ability to borrow money.

Make Ready Repair Order

After a vehicle is purchased it is detailed, fueled, the stickers and plastic is removed... before the customer takes delivery

Spread

Difference between a dealers Buy Rate and Sell Rate for financing

Repair Order (RO)

Document authorizing work on a vehicle in the service department; serves as a record of repairs performed, parts used and labor hours flagged

F&I Manager

Employee of a dealership whose job is to sell financing and insurance to customers who purchase vehicles

Residual Value

Estimated value of a car when it is returned from a lease

FICO

Fair Isaac Corporation. This is a company that calculates and distributes consumer credit scores

Acquisition Fee

Fee charged by the dealer for initiating a lease, covers the cost of processing the lease (credit reports and insurance verification) but in most cases is pure profit

Deal Jacket

Folder that contains all pertinent papers relating to the purchase and sale of a vehicle. Ex. Driver's license

Equity

For a vehicle financed through a loan, the difference at any time between what a vehicle is worth at that time, and the amount that is then owed on the loan

Window Sticker

Form the manufacturer attaches to the window of each new vehicle that shows the analysis of the vehicles suggested retail price

Closed-End Lease

Lease that gives the lessee the option of either buying the car at the end of the term at a set price or walking away without liability for any unexpected reductions in the vehicle's value

Open-End Lease

Lease typically only offered to fleets and companies in which the lessee is responsible for the difference between the residual and the fair market value of the vehicle at the close of the lease

Title (Pink Slip)

Legal document that contains ownership info of a specific vehicle

Balloon Payment/Loan

Loan that pays off only a portion of a vehicle during its term and demands a large sum to be paid at the end of the loan

Negative Equity

Means that your trade-in vehicle has a fair market value that is less than what you owe on it. This could be because you have not owned it very long and you still owe a very high payoff on it

Floor Planning

Method dealers use to finance new and sometimes used vehicle inventories through a bank or finance institution

Trade-in

a vehicle that is currently owned by the purchaser of a new or used vehicle from a dealer and that is exchanged for the newly purchased vehicle in order to reduce its net price

TT&L

abbreviation for tax, title, and license

Spiff

bonus a salesperson receives if a sale is made

House Deal

car deal that is for a dealership employee or family which makes very little profit.

We-Owe

form used to document anything that a dealer promises a customer that will be delivered after the sale.

recon or recondition

getting a car (normally a used one) ready for sale.