Car Deal, Dealer Fee and Auto Loan Glossary

Advertised price

The price displayed in a listing or promotion. It may depend on conditional incentives and may exclude taxes, government charges, dealer fees or products. See the advertised-price guide.

MSRP

Manufacturer’s suggested retail price. For a new vehicle, the factory window sticker normally identifies MSRP, factory options and destination charge.

Selling price

The negotiated vehicle price before taxes and other transaction charges. Dealer discounts, market adjustments and incentives should be distinguishable from this figure.

Destination charge

A manufacturer freight charge commonly shown on a new vehicle’s window sticker. It should not be confused with a separate dealer delivery, preparation or transport fee.

Market adjustment

A dealer-controlled price increase above the vehicle’s base pricing, also called additional dealer markup or ADM.

Out-the-door price

The complete purchase price after vehicle price, taxes and charges, before applying cash down or net trade equity. Use the OTD calculator.

Taxable base

The amount to which a sales or use tax rate is applied under the applicable state and transaction rules.

Government fee

A tax, title, registration, plate or other official charge collected under government rules. It should be separated from dealer-controlled fees.

Documentation fee

A dealer charge for preparing or processing transaction documents. State limits, disclosure and tax treatment vary.

Add-on

A product or service such as GAP, a service contract, protection package, etching or accessory. Add-ons should be individually priced and authorized.

Dealer discount

A selling-price reduction funded by the dealership rather than a manufacturer program.

Manufacturer rebate

A manufacturer-funded purchase credit offered under program eligibility and timing rules.

Conditional incentive

A discount available only when the buyer satisfies a condition such as loyalty, military status, trade-in or use of a specified lender.

Trade allowance

The gross value credited by the dealer for the old vehicle.

Trade payoff

The amount required to satisfy the old vehicle’s lender and release its lien.

Net trade equity

Trade allowance minus payoff. A negative result is negative equity and can increase the new amount financed.

Amount financed

The credit amount after the purchase price is adjusted for cash down, trade equity, negative equity and other financed obligations.

APR

Annual percentage rate, a standardized expression of credit cost. It is different from the vehicle price and should be compared across the same amount and term.

Buy rate

The interest rate a lender quotes to a dealer in dealer-arranged financing. The retail APR offered to the buyer may be higher.

Finance charge

The dollar cost of credit disclosed under the financing terms.

Total of payments

The sum of scheduled payments under the credit contract. It helps expose the cost of a longer term that lowers monthly payment.

GAP

Insurance or a contractual waiver intended to address some difference between a loan balance and the primary insurer’s payment after a covered total loss or theft.

Vehicle service contract

An optional contract covering specified future repairs under stated limits and exclusions. It is not the same as the original manufacturer warranty.

Residual value

The projected end-of-lease vehicle value used in the lease calculation and often in the purchase option.

Money factor

A lease financing factor used to calculate the rent charge.

Spot delivery

Delivery of the vehicle before financing is final. The written conditional-delivery terms determine what happens if the original funding does not complete.

Temporary tag

A time-limited permit used while permanent title and registration are processed.

Standard Presumptive Value

A Texas valuation method used for the tax base in many private-party vehicle transactions when specific exceptions do not apply.