Car dealer lingo explained

What the heck is a doc fee?

Car dealers sometimes use words, phrases or terminology that you may not fully understand. This may or may not put you at a disadvantage when buying a vehicle. Understanding these terms will most certainly offer you some peace of mind during the process.

Using slang or inside lingo on customers isn’t a practice normally condoned by dealerships, yet it still seems to happen. Here are a few of the more common terms used and their meanings:

Upside down

This is a term I really dislike. The term simply means that you owe more on your current vehicle than it’s worth as a trade-in. The trade-in value is the amount the dealer is willing to pay for your current vehicle. It’s also commonly referred to as inequity in your trade. This inequity is usually just added to your new vehicle loan. It’s a common occurrence with the long-term vehicle loans available today. You can reduce the chances of having inequity by putting more money down or financing over a shorter term.

PDI

PDI stands for pre-delivery inspection. Before a new vehicle can be sold to the public the dealership’s service department must change the vehicle from transport mode to ready-to-sell mode. They may also need to install various items not completed before transporting the vehicle to the dealership. Things like antennas and hub caps. They also check it over for deficiencies or damage.

MSRP

MSRP stands for manufacturer’s suggested retail price or is sometimes referred to as the sticker price. Technically dealers could ask more or less than this amount depending on the brand and availability. However, most dealers honor this price. Added to this price would be any dealer-installed options like popular accessories. Here in the North, remote starts and necessary engine and battery heaters are also common add-ons.

Invoice

Invoice refers to the amount a car dealer pays the manufacturer for a new vehicle. The difference between MSRP and invoice is the profit a dealer can make selling the vehicle. This profit would go towards paying wages and costs to run the dealership.

F&I

F&I is an abbreviation for finance and insurance. When buying a new vehicle, consumers are sent to the F&I office to finalize the details of the deal while the dealership prepares the new vehicle for customer delivery. In the F&I office, additional products and services may be offered to the consumer, such as dealer financing, extended warranties, service contracts, insurance, and more. At the end of this process, the purchase contract is finalized and signed, and then the customer drives home in his or her new vehicle.

Incentives and rebates

An incentive can be a specific amount of money that manufacturers pay to the car dealers once a deal is completed on certain vehicles. Car dealers may or may not pass this along to the customer. You can usually see what these incentives are on the manufacturer’s website. These differ from rebates which are usually given directly to the customer at the time of sale. You can usually accept the rebate in cash, or can apply the amount of the rebate to your down payment.

Doc fee

Documentation fees. This fee is to cover the costs of processing paperwork, doing lien searches, CarProof reports, and other costs related to completing a car deal. These fees are different at different dealerships and range for little or no cost to almost $1,000 at some dealerships.

Sub-vented interest rates

An interest rate is the amount of interest you pay on a new vehicle loan, expressed as an annual percentage rate or APR. No lenders lend money for free. All vehicle loans are subject to an APR based off of the current prime rate. Sometimes rather than offer a discount on a particular vehicle the manufacturer will offer a sub-vented or reduced interest rate instead. When you see vehicle loans offered at a low rate or sometimes zero per cent, the interest is actually being paid for by the manufacturer as an incentive for you to buy their vehicle.

Gap insurance

What people in the car business will sometimes refer to as gap insurance is better defined as replacement cost insurance. When you purchase a new vehicle, it begins to depreciate in value because it is now a used vehicle rather than a new vehicle. As we discussed about having inequity, for the first several years at least, your vehicle may be worth less than what you currently owe. If your car was stolen, or damaged beyond repair in an accident, during this time there may be a gap between what your insurance company will pay for the vehicle and what you still owe for it. Replacement cost insurance is designed to protect you against this difference. It’s very affordable yet many people still decline to take it.

Catch Driving With Jens on CHON FM Thursdays at 8:15. If you have any questions or comments you can reach out to Jens Nielsen at drivingwithjens@gmail.com, Facebook or Twitter: @drivingwithjens.

Just Posted

Judge dismisses Whitehorse fentanyl smuggling case against Toronto man

Judge Michael Cozens dismissed the case against Jibril Hosh Jibril on May 23

WYATT’S WORLD

Wyatt’s World

Territory readies for Operation Nanook

Military exercise will test the Yukon’s emergency preparedness

Federal government announces $1.5 million in funding for 2020 Arctic Winter Games

The funding makes the Government of Canada the single largest contributor to the games

YG mulls tying payment of environmental fines to driver’s licences

About $200K in fines are still owed, some from as late as 1989

Yukon youth set to show off their skills to the rest of Canada

Eighteen Yukoners have qualified for the Skills Canada National Competition at the end of the month

EDITORIAL: Yes, even killers deserve due process

No one benefits when the Yukon government is focused on denying it uses solitary confinement

Record turnout for Tour de Haines Junction cycling stage race

The field of 21 riders is the largest in the history of the event

Olympic opportunity for Yukon athletes at RBC Training Ground event

“At this age group, it’s just about saying yes to opportunities. Go out. Try it out, if you like it.”

History Hunter: The Dublin Gulch story: Part two

Despite depopulation during World War I, 14 men were reported still engaged… Continue reading

Commentary: Mining for clean energy

The infrastructure for clean energy requires mining

Yukonomist: The Yukon’s first Tesla powers through winter

So far, electric cars are still a novelty in the Yukon

Whitehorse city news, briefly

A summary of some of the decisions made at the May 13 council meeting

Most Read