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Car Buying Terms
Car buying has a
vocabulary of its own. Here are some auto buying terms you may hear
when you’re talking price.
- Invoice Price
is the auto manufacturer’s initial charge to the car dealer.
This
usually is higher than the car dealer’s final cost because
dealers receive rebates, allowances, discounts, and incentive awards.
Generally, the invoice price should include
freight (also known as destination and delivery). If you’re
buying a car based on the invoice price (for example, "at invoice,"
"$99 below invoice," "two percent above invoice"), and if freight is
already included, make sure freight isn’t added again to the
sales contract.
- MSRP (Monroney
Sticker Price) shows the base price, the
manufacturer’s installed options with the
manufacturer’s suggested retail price, the
manufacturer’s transportation charge, and the fuel economy
(mileage). Affixed to the car window, this label is required by federal
law, and may be removed only by the purchaser.
- Base Price
is the cost of the car without options, but includes standard equipment
and factory warranty. This price is printed on the Monroney sticker.
- Dealer
Sticker Price, usually on a supplemental sticker, is the
Monroney sticker price plus the suggested retail price of
dealer-installed options, such as additional dealer markup (ADM) or
additional dealer profit (ADP), dealer preparation, and undercoating.
- Phone
Pricing Dealer Interview Help
1 Stop Auto.com Car Buying
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We talked to the dealer directly but got the best price from
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Auto Leasing Secrets and Car
Buying Tips
Is Auto Leasing a rip off?
Most
car dealers have
been telling prospective car buyers that leasing a car is a great idea.
Well, they're half right -- it is great for car dealers. Did
you
know that on average, a car dealer profit on a lease is twice that of a
conventional car purchase? New car buying customers who lease
usually have to return the cars in 2-3 years, giving dealers more
chances to make huge profits off the same people.
Since
most people don't understand how auto leasing works, dishonest car
dealers have been able to take advantage of new car buyers by using
deceptive lease-vs.-buy comparisons; quoting lower car prices or
interest rates, then using higher ones in the auto lease; and quoting
higher trade-in allowances than people actually receive. Since full
disclosure is not yet required by law, few people have known the
details of their auto lease transactions.
In 1995
ABC's PrimeTime Live did an undercover
investigation that found deceptive leasing practices being used at five
out of the ten dealers they visited. That same year, a statewide
investigation in Florida resulted in 55 Toyota dealers and their
distributor setting up a $4.5 million restitution fund to settle
complaints of overcharging on leases. (Other leasing investigations are
now under way in 22 states.) On May 14, 2000 KCBS-TV announced the
results of its three-month undercover investigation of 14 new-car
dealerships in Southern California. Some of the biggest dealers in
America were caught red-handed by hidden cameras -- lying, cheating and
overcharging customers on new-car leases and purchases.
Money Saving Car Buying Tip #1
To
get the best possible deal on a new car or truck, do all of your
homework before you head out to the dealership or signing any contracts
or putting any money down. Dealer tricks (like secret APR increases)
can quickly erase any discounts or other savings that you think you're
getting, so learn how to calculate (click here for a payment calculator)
your own monthly payments. Use the Internet to get at least six quotes
before you start negotiating with dealers. Click
here for free (no obligation) quotes on new cars &
trucks.
The Car Buying Secret Price Increase
A
common car buying trick that's been used to overcharge many people on
leases. After a buyer agrees to purchase a vehicle at a negotiated or
advertised discount from MSRP, the salesperson convinces them to lease
the vehicle instead -- "to lower their monthly payment." Before cap
cost (price) disclosure was required, a dishonest salesperson would
simply use a non-disclosure lease to secretly raise the price of the
vehicle. These price increases were typically $1,500 to $2,000 (some
were $5,000 or more), and victims rarely if ever discovered the
overcharges.
Now that
cap cost disclosure is required by law, secret price increases are more
difficult to pull off. However, some salespeople have been so bold (and
so greedy) that they have attempted it, anyway -- and succeeded. Most
people don't understand how leasing works, so dishonest salespeople can
still get away with price hikes by using one of the following tricks.
First,
using a cap cost in a lease that's higher than the negotiated (or
quoted) price is not even noticed by some people because they don't
know what cap cost represents. (It's the "selling price" of a vehicle
that's used to calculate lease payments and it's supposed to be the
same as the price that was negotiated, quoted, or advertised by the
dealer.) Second, if a higher cap cost is noticed, the salesperson might
say that that figure has no effect on their monthly payment; they're
not buying the vehicle, the leasing company is; and the cap cost is set
by the leasing company so it's not negotiable. (Those are all lies.)
Third, a higher cap cost is sometimes explained away by saying that it
includes finance charges (another lie). Since most people are used to
paying thousands of dollars in interest on car loans, this lie sounds
believable.
Phone interview
Coaching Phone-Counselor.com
Deceptive Auto Lease vs. Car Buy Comparisons
To
trick people into auto leases, car salespeople often use deceptive
comparisons that are designed to make even bad lease deals look better
than conventional purchases. Instead of comparing auto lease payments
to 5-year loan payments (the term that buyers commonly choose),
salespeople may use the higher payments on 4-year or 3-year loans to
make the purchase look unattractive. Don't fall for the trick of
comparing similar terms, because a lease is nothing but a long-term
rental agreement, while a conventional loan involves ownership.
Another
trick that's used in deceptive comparisons is the quoting of inflated
loan payments -- again, to make purchases look more expensive than
leases. Inflated lease payments may also be quoted, with the "extra"
money going towards a secret price or APR increase. Since few consumers
understand how lease payments are calculated, many have agreed to
leases with monthly payments that were inflated by $75 to $100 or more.
(And that's why you should always figure out your own loan and lease
payments.)
Down Payment Mistake on Auto Leases
Down
payments on are often required on leases to make bad deals look good.
Don't fall for this! A down payment on a auto lease is nothing but
"monthly payments in advance," and the more money down, the greater the
chance that a auto lease is good for the car dealer, but not for the
customer. (In leasing, down payments don't affect the residual or build
any equity, they just lower the monthly payment.) For example, an
advertised "$299 per month" 30-month lease based on $1800 down is the
same as $359 per month with no down payment. Be sure to analyze all
auto leases based on no down payment (no cap reduction), and learn how
to figure out your own payments so you're not ripped off!
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