Glossary of Automotive Terms

Below is a small glossary of automotive industry terms that Continental Mazda would like to provide to our customers as a courtesy. If you have any questions please Contact Us


APR / Rate – APR is an acronym for annual percentage rate, which is the cost of credit (interest) paid by the consumer on an annual basis, expressed as a percentage.

As-Is – A car sold as-is has no warranty neither express nor implied. All repairs from the moment the vehicle becomes the legal property of the car buyer are at the car buyer’s expense.
Blue Book Value – The value of your trade-in per Kelley Blue Book used car price guide.

Credit Life Insurance – A life insurance policy taken out by the borrower that pays off a specific amount of a loan if the borrower should happen to die during the term of the loan. For the purposes of vehicle loans, credit life insurance usually pays the full remaining loan balance at the time of death.

Dealer Installed Option – Optional equipment that is installed by the dealership rather than the manufacturer or an aftermarket installer. Dealer installed options may include undercoating, fabric protection, pinstriping, appearance accessories, performance accessories, and any other item installed by the dealer before delivery.

Dealer Plate – The special license plate used by dealers that allows customers to legally test-drive unregistered cars on public streets and highways.

Destination Charge – The fee charged to the dealership by the manufacturer for transporting the vehicle from the factory to the dealer lot. The dealer does not mark up this fixed fee. All dealerships are charged the same destination fees, whether their showroom is directly across the street from the factory, or 2,000 miles away.

Doc Fee – A fee for handling the documentation and paperwork necessary to complete the sale. The doc fee charged is regulated by the State of Illinois.

Extended Warranty – An optional warranty policy that provides coverage against specified mechanical failures and defects over a specific number of miles or by a specific period. Contrary to the name, an “extended warranty” does not necessarily extend the factory warranty and often acts as independent coverage. They are called “extended” warranties because the new coverage period starts after the factory warranty has expired. Extended warranties are closely related to vehicle service agreements and extended service agreements.

F&I – An acronym for finance & insurance. The F&I office is where you will finalize your new vehicle purchase by working out the final paperwork with the dealership. The F&I person may assist the buyer with financing, insurance, and last minute adjustments to price.

Factory Incentive (Customer) – Factory-to-consumer incentives are provided to customers by manufacturers to assist in the selling of year-end or slow-selling models. These incentives are passed on in whole to the customer in the form of rebates, cash back, or lower interest rates. Not all customers will quality for every incentive. Sometimes called a Commercial Incentive.

Finance Charge – The total amount of interest paid over the term of the auto loan.

Gap Insurance – Gap insurance will insure the difference between what is owed on the vehicle and what the insurance company says the vehicles is worth in the vent the vehicle is totaled in an accident or stolen. For example, if an insurance company claims a totaled vehicle is worth $10,000 and the owner owes $15,000 then gap insurance protects the owner from having to pay the $5,000 difference out-of-pocket to settle the vehicle loan.

Incentive Rate – A special interest rate offered by manufacturers to customers will excellent credit histories. Not every customer may qualify for incentive rates.

Lease – A lease is a fixed, long-term contract under which the customer makes use of a vehicle that they do not own, but instead rent from the dealership or leasing company. The advantage of a lease is that the customer only pays for the portion of the vehicle they use.

Maintenance / Service Contract – A contract for vehicle maintenance over a pre-defined span of time or miles. Service plans may cover everything from routine scheduled maintenance to full mechanical coverage similar to an extended warranty.

Payment Protection Plan – A form of insurance that protects the borrower in the event the borrower cannot make the payments due to financial hardship or unexpected circumstances. See Credit Life Insurance.

Make – The manufacturer of a car (Mazda, Audi, Acura, Ferrari, Maserati, etc).

Model – The family line of a vehicle (MAZDA2, MAZDA3, MAZDA5, RX-8, CX-7, etc). Models may have many different trims available. See Trim Level.

MSRP – An acronym for manufacturers suggested retail price. This is the retail price as determined by the manufacturer and seen on the vehicle information sticker as required to be found in the window of every new vehicle. Optional equipment and factory-installed packages are seen as line-items on the information sticker. Sometimes called sticker price. MSRP does not include financing charges, taxes, or destination charges. Dealer-installed options may increase the price of a vehicle over MSRP.

Option Code – All optional equipment and packages have codes that are often used to make up packages. Option codes may be listed on the new vehicle information sticker as required to be found in the window of every new vehicle currently available.

Rebate – See Factory Incentive (Customer).

Term – The number of monthly payments on an auto loan. Typical new car loans range from 24 to 84 months, with 60 months being typical. A longer term will results in a lower payment, but longer terms increase the total amount paid over the course of the term due to interest charges.

Title – The legal document that shows the ownership history of a vehicle.

Trade / Trade-In – Any item, usually a vehicle, which is traded in toward the purchase of a vehicle from a dealership. A simple way to think about a trade-in is that the dealership is buying your old vehicle, and you are buying the dealerships vehicle. The proceeds from the trade-in are applied to the purchase price of the vehicle owned by the dealer.

Trim Level – The standard set of features found on a specific vehicle; not including options, special equipment, and paint. Most vehicles come in at least two trims, and some models may have many different trims. For example, the 2011 MAZDA3 i Sport and the 2011 MAZDA3 i Touring are two different trims of the same model car.

Upside Down – A situation in which the car buyer owes more money on their trade-in than the dealership is willing to give for the trade-in. The difference is applied to the loan amount.