Used Car Glossary

Man showing woman a car for sale
 

A Glossary of Common Used Car Terms

 

Asking Price

The original price requested by a seller before any discounts have been accounted for.
 

Auto Insurance Broker

A middle man that does not work exclusively with one insurance provider but rather one that works across multiple auto insurance carriers to construct policies and coverage for policyholders. 
 

Bill of Sale

A document that highlights the details of a car sale, usually prepared by the dealer from which a vehicle is purchased.
 

Blue Book

The term synonymous with a car's market value, trademarked and published by Kelley Blue Book, a price guide publisher headquartered in Irvine, California.
 

Body Style

The exterior shape of a car, usually defined as coupe, sedan, truck, etc.
 

Bumper to Bumper Warranty

A guarantee that covers repair costs for an entire vehicle during a specified period of time.
 

Captive Insurance Agent

A representative that works exclusively with one auto insurance provider to construct policies and coverage for policyholders. 
 

Car Lease

A contract between a lessor and a lessee over a specific period of time in which monthly payments are made to the lessor by the lessee for the use of a vehicle and in which the title remains in the lessor's possession as owner of the car.
 

Certified Pre-Owned (CPO) Cars

Used cars backed by comprehensive inspections and manufacturer warranties. 
 

Collision Insurance

Insurance that covers damage to a vehicle if it collides with another vehicle or object. 
 

Complaint Ratios

A measurement used by various state insurance departments to track consumer complaints against insurance companies.
 

Comprehensive Insurance

Insurance that covers damages to a vehicle beyond the owner's control, such as flood, hail, fire or theft.
 

Credit Report

A record of an individual's borrowing and payment history, including information about late payments and bankruptcy.
 

Credit Score

A numerical score provided on a credit report that establishes the credit worthiness of a person based on the individual's borrowing and payment history.
 

Dealer Installed Options

Optional equipment installed by a dealer, such as rust proofing or fabric protection. 
 

Dealer Preparation Fees

The costs associated with prepping a car for sale, such as interior and exterior detailing.
 

Deductible

The out-of-pocket portion of an insurance claim that is not covered under the insurance policy.
 

Depreciation

The diminished value of a car over time due to factors such as age, mileage and condition. 
 

Detailing

A thorough exterior and interior cleaning of a car.
 

Direct Insurance Carrier

An organization that sells insurance direct to consumers, typically online.
 

Disposition Fee

The fee a leasing company may charge for retrieving a car at the end of a lease. 
 

DMV

A state's Department of Motor Vehicles.
 

Down Payment

The portion of the purchase price of a car paid from the buyer's own funds as opposed to the portion that is financed.
 

Excessive Mileage Charges

The fees assessed by a leasing company if a lessee drives a car more than the miles stipulated in a leasing contract.
 

Extended Warranty

Similar to an insurance policy, an extended warranty protects against vehicle repair costs once a car's original warranty expires.
 

F & I

The acronym for finance and insurance, or the paperwork labor involved with the sale of a car.
 

Fair Market Value

The price at which a car passes from a willing buyer to a willing seller.
 

FICO Score

A credit score or number representing the credit worthiness of a person based on the individual's borrowing and payment history.
 

Finance Charge

The cost of credit, or the cost of borrowing, that includes interest and other charges such as financial transaction fees.
 

Fuel Economy

A unit of measurement of the amount of fuel needed to power a vehicle over a certain distance.
 

Green Cars

Cars that are friendlier to the environment than conventional gasoline-powered cars.  Green cars usually consume less petroleum than conventional cars, or use renewable energy sources for power versus non-renewable energy sources.
 

Hybrid Cars

Cars that are powered by both an internal combustion engine and an electric motor.
 

Interest Rate

The price paid for the use of borrowed money; the amount a lender charges for the use of its funds.
 

Lemon Law

State law that protects consumers against the purchase of a defective vehicle.
 

Liability Insurance

Insurance that protects the policyholder against bodily injury or property damage caused to another person.
 

Lien

A third party's legal right to property, to ensure the repayment of a loan or outstanding debt.
 

Loan Term

The length of time a borrower has to repay a loan.
 

Market Value

The price at which a car would currently sell.
 

Medical Payments Insurance

Insurance that covers a policyholder's medical or funeral costs beyond that covered by Personal Injury Protection insurance, in the event of bodily injury or death caused by an accident.
 

Miles per Gallon (MPG)

A unit of measurement of the distance a vehicle can travel on one gallon of gas.
 

Monthly Payment

The amount of principal, interest and taxes paid monthly on an auto loan.
 

Odometer Rollback

The illegal practice of tampering with or rolling back miles on a car, to give the false perception that it has been driven less miles than it actually has.
 

Optional Equipment

Equipment or features of a car that are not part of the standard package.  Optional equipment can be ordered for additional expense, either individually or as a package.
 

Personal Injury Protection (PIP)

Car insurance that covers costs such as medical expenses, loss of income and funeral expenses for the policyholder, regardless of who is at-fault in an accident.
 

Policyholder

The individual that holds the insurance policy of a car; the person(s) covered under an auto insurance policy.
 

Principal

The initial amount of a loan upon which interest is calculated.
 

Private Party Sale/Private Party Purchase

A used car sales transaction involving the purchase or sale of a pre-owned vehicle between private buyers and sellers.
 

Private Party Value

The price you can expect to pay when buying a used car from a private seller, or the price you can expect to receive when selling a used car to a private buyer.
 

Resale Value

How much a car is worth in the future, taking into consideration factors such as supply and demand, the type of car, the condition of the car, the mileage of the car and extraneous market conditions at the time of resale.
 

Residual Value

The depreciated value of a car at the end of its lease term. 
 

Retail Value

The price you can expect to pay when buying a used car from a dealer.  Retail value could also be considered the starting point from which to negotiate a lower price.
 

Salvaged Title

A title issued to a vehicle that has been damaged beyond a certain percentage of its pre-accident market value, and additionally in some states, a title issued to cars that have been stolen.
 

Title

A legal document establishing a person or a business as the legal owner of an automobile.
 

Total Cost of Ownership

The purchase price of a car plus the total costs associated with operating that car over its lifetime.
 

Trade-In Value

The price you can expect to receive from a dealer when you trade-in your car towards the purchase of a new one.
 

Uninsured/underinsured coverage

Insurance that covers the costs associated with an accident in which the policyholder is not at fault and in which the other driver isn't insured — or doesn't have enough insurance — to cover the damages or injuries the policyholder sustained. 
 

Vehicle History Report

A report that outlines background information about a used car, including title information, ownership history, accident history and service history.
 

Vehicle Identification Number (VIN)

A unique number assigned to a car, commonly found on the left hand side of the dashboard, that identifies characteristics about the car, including the manufacturer, year, model, body style, engine specifications and serial number.
 

Warranty

An oral or written guarantee that a vehicle will meet certain specifications or will function or perform as specified.
 

Wholesale Value

The price a dealer can expect to pay for a car.
 

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