Car buying glossary
The words you will hear when you buy a used car, explained in plain English. Rules vary by state, so check your own state's requirements.
A
- APR
- Annual percentage rate: the yearly cost of a loan as a percentage, including interest and some fees. The best number for comparing loans. Read: Used car financing basics: APR, loan term and down payment explained
- As is
- Sold without a dealer warranty. Once you buy it, repairs are your responsibility. The Buyers Guide on a dealer's car says whether it is sold as is.
B
- Bill of sale
- A document recording the sale: the buyer, seller, price, date, VIN and mileage. Keep a copy.
- Buy here pay here
- A dealer that finances cars itself and collects your payments directly, often for buyers who cannot get a bank loan. Read: Buy here pay here: how it works, when it makes sense and what to watch for
- Buyers Guide
- The form posted in the window of a used car at a dealer. It tells you whether the car comes with a warranty or is sold as is, and who to contact after the sale.
C
- Certified pre-owned (CPO)
- A used car inspected and backed by its manufacturer's extended warranty, sold by a franchised dealer meeting the program's rules.
- Cooling-off period
- A window to cancel a purchase. In general there is no automatic one for car purchases from a dealer, so check before you sign.
- Curbstoning
- An unlicensed seller who regularly flips cars while posing as a private owner. Read: Used car scams to avoid: the red flags for buyers and sellers
D
- Depreciation
- The loss in a car's value over time. Most cars lose the most in their first years.
- Doc fee (documentation fee)
- A fee a dealer charges for preparing paperwork. It is separate from tax, title and registration. Read: Dealer documentation fees explained: what they are and what to do about them
- Down payment
- Money you pay up front, which lowers the amount you borrow.
F
- Flood title
- A title brand showing a car was damaged by water. Read: Salvage, rebuilt and flood titles: what title brands mean for a used car
- Frame damage
- Damage to the structure a car is built on, usually from a serious accident. It can affect safety and value.
L
- Lemon law
- State laws that protect buyers of vehicles with serious defects the maker cannot fix. Coverage and rules differ by state, and many apply mainly to new cars.
- Lien
- A lender's claim on a car until its loan is paid off. A car with a lien cannot be transferred cleanly until it is released.
- Loan term
- The number of months you take to repay a loan. A longer term lowers the payment and raises the total interest.
M
- MSRP
- Manufacturer's suggested retail price: the price a maker suggests for a new car. Used cars are priced by the market, not by MSRP.
N
- Negative equity
- Owing more on a car loan than the car is worth. It can make trading in or selling harder.
- NMVTIS
- The federal National Motor Vehicle Title Information System, a database of title and brand information that approved providers use for history reports.
O
- Odometer rollback
- Illegally lowering a car's recorded mileage to raise its price. Read: How to read a vehicle history report (and what it can't tell you)
- Out-the-door price
- The total you pay to take the car home: price, tax, title, registration and dealer fees, less any trade-in. Read: What is out-the-door price? How to compare used car offers properly
P
- Pre-approval
- A lender's estimate of what it will lend you and at what rate, before you shop. It gives you a budget and a rate to compare against the dealer's.
- Private sale
- A sale between two individuals rather than through a dealer. There is no dealer fee, and usually no warranty.
R
- Rebuilt title
- A title for a car that was once salvage and was repaired and inspected so it can be driven again. Read: Salvage, rebuilt and flood titles: what title brands mean for a used car
- Recall
- A free repair a manufacturer must provide for a safety defect. You can check a VIN for open recalls on the government's recall site.
- Registration
- The record, with your state, that lets you drive a car legally on public roads, shown by plates and a registration card.
S
- Salvage title
- A title brand showing a car was declared a total loss. Such cars generally cannot be registered until repaired and inspected.
- Service contract
- A paid plan to cover certain repairs, often called an extended warranty. Read what it covers and what it costs before you buy.
T
- Title
- The legal document that proves who owns a vehicle. A clean title in the seller's name is essential.
- Title brand
- A permanent note on a title that something serious happened to the car, such as salvage, flood or lemon buyback.
- Trade-in
- A car you give the dealer toward the price of another car.
V
- VIN
- The vehicle identification number: a unique 17-character code on the car. Use it to run history reports and recall checks.
W
- Warranty
- A promise to repair certain problems for a set time or distance. Used cars may come with a dealer warranty, a manufacturer's remaining warranty, or none.
Y
- Yo-yo financing
- Taking a car home before the financing is final, then being told the deal has changed and signing worse terms. Read: Used car financing basics: APR, loan term and down payment explained