The HisDaddy.com Car Buying Glossary
Bank Value - This
is the value that a bank will give a new car. It's
always the LOWEST value for a car. The reason for
this is that if the bank buys the car (say, when they're
giving you a loan for it -- remember, they own it
when you get a loan for it), they need to make sure
they'll make a profit if they have to sell it.
Dealer Holdback
- The amount of money a manufacturer gives back to
the dealer when he sells you a car. How WRONG is that?
It's a totaly scam to "protect" the profit
a dealer will make when he sells you a car. Actually,
it's a legal way that the manufacturer and dealer
mislead you into paying more for a car. This money
is YOURS, and don't ever let them tell you differently!
For a list of the dealer holdback rates, click
here. Note - sometimes this link is slow, so check
back, as it's a great table!
Dealer Price - This
misleading term is usually not the final cost a dealer
will shell out for a vehicle! Yes, the dealer did
initially drop an amount of cash equal to "dealer
price" to get the vehicle, but there are ways
that dealer will get some of that money back. Consider
this the INITIAL money the dealer put out for the
vehicle, not the FINAL cost he or she will pay. Likewise,
there's no reason for you to pay even this amount,
either!
List Price - There's
no such thing. The only things that have list prices
are Santa Claus and the Perpetual Motion Engine. If
a dealer uses this term, insist that he clarify whether
he means MSRP, Dealer
Price, or Bank Value.
Loan Referral -
When a dealer sets you up with your car loan, he's
going to get a kickback from the bank! Generally,
this is only a few hundred dollars, at most, but if
you're quick enough, you may be able to leverage this
money in your price negotiations!
MSRP - "Manufacturer's
Suggested Retail Price": Note here that
the word "suggested" is key. Basically,
the manufacturer builds the car, sells it to a dealer,
and suggests to that dealer what the dealer should
sell it for. This is NOT the price the dealer pays
for the car, nor should you EVER pay this price for
any car! See the article "How
To Buy A New Car" for more information.
Option - This is something
that you can choose to have installed in your vehicle.
There's no such thing as a "standard option,"
so when the dealer says that, inform him that it's
a standard, not an option. Options are things such
as a sunroof, which you have to pay extra to get installed.
If the car you want has options installed that you
don't want, insist to not pay for those pieces. Afterall,
you don't want them. If the dealer really wanted to,
he could order you a new car from the factory with
those options not installed. Insist on having the
dealer split the cost of these "options"
with you if he doesn't want to order a new version
from the factory.
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