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Maintenance Contract/Service Contract
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A contract agreed upon at purchase that provides vehicle maintenance over a predetermined amount of time or mileage. Service contracts are all different and should be read carefully before purchased.
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Declination
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Refers to a refusal to insure an individual, a turn-down issued by an insurance company.
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Lease Buyout
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This is the term used to refer to when a lessee exercises the buy option at lease end. The buyout price varies based on not only year, make, and model, but also wear-and-tear, actual mileage, and residual value. Any additional fees, charges, or penalties would be included in the purchase price, and that price can usually be financed through the same company that maintained the position of lessor during the time of the lease. This provides a familiarity that gives the lessee greater confidence in purchasing the vehicle.
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Commission
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This is the amount of money the salesperson receives from the sale of a vehicle. Most automotive salespeople are paid strictly on commission.
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Options
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Features added to an automobile, such as a sunroof, rearview camera, navigation system, leather seating, third-row seats. These are also called add-ons.
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Insurable Interest
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Refers to interest in property, especially loss or destruction of which property could cause the individual financial loss.
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Residual Value
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The residual value refers to the value of a vehicle at the end of a lease's term. This is usually found using the Automotive Leasing Guide and it plays a very large role in determining both the monthly payment, as well as the buy option amount. Higher residual values result in lower monthly payments, but cause a higher buyout option at lease end. The opposite is also true. Lower residual value means higher monthly payments, but a lower buyout at lease end.
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Competitive Auto Repair Parts
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Parts made by a company other than the automobile's manufacturer. Parts meet or exceed the quality of manufacturer parts, but cost less. Most auto insurance companies guarantee these parts for as long as the insured owns the vehicle.
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Model
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This term describes a particular line of vehicle within a certain make (i.e. - Accord, Corolla, Focus, Charger, etc.)
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Pink Slip
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Another term to describe a vehicle's title certificate.
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Accrue
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Accumulation of interest charges on a loan.
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Finance Charge
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The total amount of interest that is to be paid over the life of a vehicle loan.
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Primary Use
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Refers to the way the vehicle is most often used. Primary use options include to and from work, business, pleasure or farm use.
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V6
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This is the term which refers to a V-shaped engine with six cylinders total, three per bank lined up in a row. V6 engines have two separate cylinder heads.
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M+S
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The abbreviation for Mud and Snow, this describes a particular type of tire that is made specifically for better traction in muddy and snowy conditions. M+S tires typically have very aggressive treads.
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Agreement of Sale
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Also called contract, sales agreement, and purchase agreement. A contract in which the seller agrees to sell and a buyer agrees to buy, the terms of which are clearly spelled out in writing and must be signed by both parties to be binding.
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TPMS
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An acronym for Tire Pressure Monitoring System. This is a system that utilizes sensors in the vehicle's wheels to monitor tire pressure. When pressure becomes too low or too high a warning light is triggered in the vehicle cabin.
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Stopping Distance
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The distance it takes a particular tire to come to a full stop from the point of brake application. Rubber compounds, psi, and tread patterns all have an effect on stopping distance.
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Push, Pull, Drag
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An incentive term that describes trade-in value for a dealership. It offers a set amount of money for a trade-in, regardless of condition.
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Amortization Table
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Table showing the amount of principal and interest at regular payment intervals, and the corresponding remaining unpaid loan balance after each payment.
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