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Vehicle Identification Number
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Also abbreviated as VIN. This is an 17-digit alphanumeric serial number assigned by the vehicle's manufacturer that identifies the specific vehicle. The VIN is located in several locations on the vehicle, on a sticker on the door, and on the dashboard, visible through the windshield. It may also appear in other areas on the vehicle. Loan and purchase documents always contain the vehicle identification number.
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Rating Plan
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The rules of the plan used to determine insurance premium. Involves modification of base rates by applying discounts and surcharges.
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Theft
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Refers to the act of someone intentionally taking property that does not belong to them with the express intent of depriving the rightful owner of the property.
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Agreed Price
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The cost or price of repairs that are agreed to by the auto damage adjuster or independent appraiser and the body shop representative.
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GAP Insurance
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Stands for Guaranteed Asset Protection Insurance. This insurance covers the difference between what is owed on the vehicle and what the NADA value is of the vehicle in the event the vehicle is totaled in an accident or stolen. For example, if the value of the vehicle at the time of accident is $5,000 and the consumer still owes $7,000 on the loan, GAP insurance covers the difference of $2,000 to pay the vehicle off.
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Lease Inception Cash
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This is the term that refers to the total amount of cash due at signing. This term is sometimes confused with the down payment. Lease Inception Cash includes all taxes, fees, monthly payments, and down payments being paid at the time of lease signing. It is all-inclusive, and it is one of the main incentives given during lease blowouts. Dealerships will often offer zero-down lease inception cash deals to boost sales or for special sales events.
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Auto Theft
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A type of loss that is covered under comprehensive coverage.
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Interest Rate
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Part of the annual percentage rate (APR) equation, the interest rate is the annual rate of return that the lender receives on the loan principal.
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Amortization
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Refers to the reduction and retirement of a debt through periodic payments of interest and principal.
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Anti-Lock Braking System (ABS)
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A computer-controlled high pressure system that assists the vehicle's normal braking system. ABS works to slow all wheels at the same rate, thus preventing loss of driver control of the vehicle.
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Dealer Preparation Fee
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Also referred to simply as the Prep Fee, the Dealer Preparation Fee is the charge by the dealership to get a vehicle ready to purchase or lease. Mostly this consists of cleaning the car, washing it, and filling it with fuel. However, there are also various little tasks that technicians perform (such as installing hub caps, removing protective films, and setting the vehicle's internal clock).
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Original Equipment Manufacturer Parts (OEM)
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Refers to parts that are obtained from the car's original manufacturer or the supplier of the original part.
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GAP Insurance
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This refers to the insurance available for purchase at lease signing that will pay off your lease in the event of an early termination that you, the lessee, are not responsible for. GAP stands for Guaranteed Asset Protection (it is also referred to as Guaranteed Auto Protection by insurance companies). It pays the difference between the amount owed on the lease at the time of early termination and the actual residual value for the lessee. For example, if your vehicle gets totaled and you still have $10,000 remaining on the lease, but the residual value is listed as $8,000, your GAP insurance would pick up the extra $2,000 owed.
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Subrogation
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See Payment Recovery.
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Independent Adjuster
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Individual who estimates vehicle losses working on behalf of an insurance company but who is not employed by the insurance company.
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Demo Model
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This term refers to a brand new vehicle being used by a dealership's salesperson. Demos can be given for help with promotions or as incentives to salespeople.
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Indirect Financing
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Term refers to a loan that originates by a dealership and is assigned to a financial institution.
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Guarantor
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Someone who guarantees (agrees) to pay off the debt of another person.
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Lug
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The threaded stud which is housed in the hub and used, along with lugnuts, to secure a wheel to a vehicle. Different vehicles have different numbers of and bolt patterns for their lugs.
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Fair Credit Reporting Act
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Federal law enforced by the Federal Trade Commission (FTC) that guarantees consumers the right to see their credit records at credit reporting bureaus. Law also establishes procedures for consumers to correct mistakes on their credit record.
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