Dealership Terms

Special Financing

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

Loaded

1) A car with every option

Physical Damage Insurance

1) Insurance policy the F&I department might sell to customers

Pack

1) Used in figuring a salesman's commission, depending on the individual dealer they will deduct anywhere from $75.00 to $250.00 from the gross profit of the deal and pay the salesman his commission figured on this difference

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.

Lemon

A vehicle with numerous past and present mechanical problems that can never seem to be repaired properly.

Extended Warranty

Also known as a "service contract", it is an agreement to cover certain specific service and repairs beyond the life of the factory warranty.

Gross

Amount of profit.

Make Ready Repair Order

An internal work ticket that occurs when a vehicle is purchased. The vehicle is detailed, fueled, the stickers and plastic is removed... before the customer takes delivery.

Junker

An old car ready for the scrap heap.

Capitalized Cost Reduction

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

Back End

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).

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.

CSI

Customer Satisfaction Index

DOC

Daily Operating Control

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.

Tag / Hat / Block

Identifier put on a vehicle when it comes in for service.

Gap Insurance

Insurance that 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.

NADA

National Automobile Dealers Association

Negative Equity

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.

OAC

On Approved Credit

Bird Dog

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

Warranty Repair Order

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

Buried

Owes too much on their trade (negative equity). See also: UPSIDE DOWN.

Accessories

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

Fixed Operations / Back End

Parts, service and body shop departments.

Service ADVISOR (Service Writer)

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

PDI

Physical Damage Insurance

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.

RO

Repair Order

Internal 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.

Down

Short for down payment. Money put down to lower the amount financed on 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.

Destination Charge

The amount charged for transporting new cars from the factory to the dealership. The destination charge on the dealer invoice is not negotiable, but you should never pay any added destination charge 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.

Absorption Rate

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

Upside Down

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

BK

The customer has a bankruptcy in their credit history.

Spread

The difference between a dealer's Buy Rate and Sell Rate for financing a loan or lease, typically around one percent. Dealers generally don't disclose this spread, so do your homework on the actual rate being offered by the manufacturer or finance company and negotiate to reduce or eliminate the spread.

Residual Value

The estimated value of a car when it is returned from a lease.

Reserve

The income a dealership realized on a contract in excess of the finance source's discount rate.

Front End

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

Numbers

The price of the vehicle.

Turnover

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

Appraisal

The process of valuing a trade-in, usually completed by the Used-Car Manager

Unwind

The reversal of a car deal. (i.e. A customer does not get approved so they must "unwind" the deal).

End of Month

The 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.

Vehicle Identification Number

The unique serial number used to identify each automobile.

Open-End Lease

This is a 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.

Green Pea

This is a new salesman.

Switch

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

TO

Turnover

Daily Operating Control

Used mostly by the General Manager, this is a report detailing financial metrics of the dealership. It 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.

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.

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.

VIN

Vehicle Identification Number

Mini

When a car is sold at a very low profit and the sales person's commission is a minimum flat fee (i.e. $50, $100)

Bait and Switch

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

Dealer Trade

When a new vehicle is traded between dealerships for a customer/sale.

Customer Satisfaction Index

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

Dealer Invoice

the amount the manufacturer charges its dealers for a car.

Buy Rate

the rate at which a car dealer acquires financing. The dealer can profit by offering the financing to a consumer at a higher cost and keeping the difference (Spread).

AD Car

A basic car with few options (used to draw customers into the dealership with a low price and/or low payment). See also: TEASER.

Teaser

A basic car with few options. They're used to draw customers into the dealership.

Repo

A car that's repossessed for non-payment of a loan.

Bureau

A credit report on a customer.

Closed

A deal is done. The customer agreed to purchase the vehicle.

Deal Jacket

A folder that contains all pertinent papers relating to the purchase and sale of a vehicle. Example: copy of driver's license, proof of insurance, contract, We-Owe, odometer statement, pink slip.

Window Sticker

A form the manufacturer attaches to the window of each new vehicle that shows the analysis of the vehicle's suggested retail price. (Also referred to as "Monroney Sticker")

Twenty Group

A 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.

Closed-End Lease

A 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. Also known as a "walk-away lease".

Balloon Payment / Loan

A loan that pays off only a portion of a vehicle during its term and demands a large sum - the "balloon" to be paid at the end of the loan.

TT&L

Abbreviation for tax, title and license.

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.

Repair Order

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.

EOM

End of month

Titile / Pink Slip

Legal document that contains ownership information of a specific vehicle.

Floorplanning

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

WAC

With approved credit

Acquisition Fee

a 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.

Rebate

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

2) Refers to a sales individual

be it salesman, sales manager, or Sales Business Manager, in reflecting his ability to do his required job (i.e., aggressive, pushy).