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Definitions (86)
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gray market vehicle
Any car that is imported but not through an authorized dealer. A gray market vehicle may not meet U.S. standards for emissions, crash safety, or other requirements.
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negative equity
When the amount owed on a vehicle is more than its market value.
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acquisition fee or doc fees
These terms are sometimes interchangeable. An acquisition fee is a fee that is charged by a dealer to start a lease or buying process, typically in new car leasing or in some cases used car leasing. This is a “processing fee” that allows the dealer/lender to pull credit reports, insurance verification, and other things needed to ensure that you are [..]
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annual percentage rate
The annual interest rate that a lender charges you to borrow money. Usually this is based on the Federal rate, plus some additional amount. It can also go up or down based on your credit worthiness. This rate is also known as a finance rate.
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as-is
When you see this on a car, know that the car is sold exactly as it is, usually (according to Autobytel) without a warranty. Any issues that come up with an ‘as-is’ car are the buyer’s responsibility.
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balloon payment/balloon loan
A loan that usually only pays off a portion of the total cost of a car through monthly payments. At the end of the loan, the remaining balance comes due in one large chunk—the “balloon.”
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blue book or blue book value
The value of your trade in based on Kelley Blue Book’s used car guide. There are other guides that dealers and private sellers use to determine value as well, such as NADA, Edmunds, TrueCar, as well as the Black Book for wholesale.
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bump
This is a bit inside baseball, but this is the difference between the rate the dealer pays for financing on a lease or loan and the rate that they sell it to you at. These rates are generally around 1% which is why it makes sense to shop for a loan outside of the dealer. You can generally get a better interest rate at a credit union or big bank wit [..]
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buy rate
The rate that a car dealer gets financing. This rate is usually beefed up for the consumer by as much as 1% (the Sell Rate). The dealer keeps the difference between the Buy Rate and the Sell Rate. This is known as a Spread. See also Bump or Bump Rate.
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buyout price
The cost of buying a car at the end of the lease term. As Car & Driver notes, you need to look closely at the costs of buying the car outright versus the cost of purchasing after the lease is up. Dealers can offer a low residual/low money factor lease but it’s rare.
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