Car sales terms to know

All the terms that you need to know as a beginner in the sales industry,

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A fresh customer walks on the lot

Road-to-the sale

The standard steps of selling a car, meet, greet, qualify, present, demo, and close

Beback

A customer who says they will return

Tire kicker

A shopper who wastes your time and never buy

Desk

The sales manager who recieves offers, credit, and trade in values

T.O ( Turnover)

Handling a stuck customer to a manager to help close the sale

Stips (stipulations)

Proof of income, residence, or insurance a lender needs to approve a loan.

Unit

Industry slang for a single vehicle sold

F&I (finance and insurance)

The office where buyers finalize contracts, sign loans, and buy warrenties

Back-end gross

Dealership profit made from loans, warrenties, or add-ons in the F&I office.

Trade-in

The customers old car used to lower their new car price.

Equity

The difference between what a customer owes on a car and what it is worth

Negative equity

The customer owes more on a car than it is worth

Holdback

Money the manufacturer gives back to the dealer after the car is sold

Pack

A hidden flat fee added to the base cost of a car

APR (Annual percentage rate)

Represents the true, total yearly cost of borrowing money, to buy your vehicle

MSRP

The price the manufacturer suggests the car should sell for

Down payment

The upfront cash you pay towards the cars price

Rebate

A cash discount fee charged by the dealer to prepare and file paperwork

GAP insurance

Optional coverage that pays the difference between your auto loan balance and the car’s value if it is stolen or totaled.

Front end

The profit made directly from selling the vehicle.

Backend

The profit made from financed products, sold in the business office.

Closed-end lease

A lease that gives the lessee the option of either buying the car at the end of the term

Excess mileage charge

Penalties paid at the close of a lease if the lessee drives the vehicle a greater distance than the limit stipulated.

Extended warrenty

Also known as “ service contract” it is an agreement to cover certain specific service and repairs beyond the life of the factory warrenty.

Financing costs

An APR, a money factor, or a rent charge, this is the charge for using the banks— or another lenders

Subprime costs

Loans given to borrowers who represent a particularly high risk to the lender either because of spotty credit or because the vehicle being leased or bought is more expensive than the borrower can reasonably afford.

F&I PVR

The average gross profit a dealership makes on the "back end” of a car sale

AG (average gross)

The typical profit margin on a sale

Front end

The profit generated only from the sale of the car itself. It is the difference between what the dealer payed for the car and the price the customer payed.

PVR (profit per vehicle retailed)

A metric that divides the total profit by the total number of cars sold to find the average per car.

Invoice price

The actual amount the dealer paid the manufacturer for the car

Acquisition fee

A fee charged by the dealer for initiating a lease; ostensibly covers the costs of processing the lease— credit reports and insurance verification.

Balloon payment

A loan that pays off only a portion of a vehicle during its term and demands a large sum.

Buy rate

The rate at which a car dealer acquires financing. The dealer can profit by offering the financing to a customer at a higher cost.

Cost of funds

An APR, a money factor, or a rent charge, this is the charge for using the banks— or another lenders— money to acquire the car.

Documentation fee

Charges intended to cover the cost of processing the paperwork involved in the sale of the car

Equity lease

A rare kind of lease in which the lessee must buy the vehicle at the end of the lease.