Auto Loan Learn the Terms
Car Talk
Below are some terms you may hear when shopping for a new or used vehicle or auto loan. Some words may have more than one meaning. Only those meanings relating to this site will be used.
Definitions A - Z
F
Factory Invoice Price
Factory Invoice Price or Invoice Price is the manufacturers initial charge to the car dealer for a vehicle. This charge is usually higher than the dealer's final cost because dealers receive rebates, allowances, discounts, and incentive awards. The dealer will have a printed invoice that shows this price figure. It is the invoice price that you want to work from. You can get the invoice price by looking at the dealer's invoice or reviewing car publications. The invoice price always includes freight, also known as destination and delivery which is passed on to the buyer without any markup. If you're buying a car based on the invoice price and freight is already included, make sure freight isn't added again to the sales contract. The factory invoice price is less than the manufacturer's suggested retail price (MSRP), which is also called list price or sticker price or monroney (involving or relating to money) sticker price. This is the sticker you see attached to a new vehicle's window. This label is required by federal law, and may be removed only by the purchaser. On this sticker is the manufacturer's suggested retail price (MSRP), which is the price the manufacturer thinks the new car should sell for, the base price, all standard equipment, the manufacturer's installed options, the manufacturer's transportation charge, and the car's fuel economy (mileage).
Fixed Rate Financing
The interest rate remains the same over the life of the contract, which makes your monthly payments stay the same.
Finance Charge
The total dollar amount you pay to use credit.
Forced Placed Insurance
If the lender discovers that you have no car insurance on your vehicle, they will take out a special policy to cover the vehicle loan they approved for you. This kind of insurance is very very expensive and it only covers the collateral. The lender will then add the premium costs of the new vehicle insurance policy to your loan, and you must pay it, so make sure you get the vehicle insurance coverage you need.
Front End Profit
Dealers will often take smaller profits when selling you a car, called front end profit, if they know that they are going to make a nice profit on the financing of the car, called back end profit. Car dealers make approximately half of their money through financing the autos they sell.
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