Know Key Terms When Researching a Vehicle Purchase
Shopping for a new vehicle can be somewhat like a scrabble game, with all the pieces laid out on the table. Start talking to a salesperson, a loan officer or even a helpful friend offering advice and you may find yourself bombarded with a bunch of acronyms that leave you scratching your head in confusion. MSRP, APR, NADA … what do they mean?! These are a few acronyms and other terminology you may encounter in the purchasing and financing process:
- Manufacturer’s Suggested Retail Price (MSRP) – This is the sticker price of the vehicle. NADA (National Automobile Dealers Association) and Kelley Blue Book suggested retail values should be considered estimates only and vary by region, mileage, condition and vehicle options.
- Vehicle Identification Number (VIN) – A unique 17-character VIN on vehicles from 1982 and newer that provides access to valuable information about the vehicle’s history.
- Certified Used Vehicle – These vehicles have received rigorous inspections and often come with extended warranties and special financing, among other perks.
- No-Haggle Pricing – No-haggle pricing simply means the price marked on the vehicle is the price you will pay to own it. It’s not negotiable.
- Annual Percentage Rate (APR) – This is the yearly interest rate you will pay when financing a purchase.
- Term – This is the amount of time you have to pay back the money borrowed.
- Gap Coverage – Guaranteed Asset Protection (GAP) provides coverage to help pay the difference between what your insurance will pay and what you owe on your loan if your vehicle is totaled or stolen. People often find themselves “upside down” on their vehicle loan, meaning they owe more on the loan than the vehicle is worth due to depreciation.