Glossary of Car Buying Terms: What You Need to Know
For someone who’s not in the car buying business, the standard terms for vehicle type and pricing aren’t always as clear. The average individual buys a car once every six years, and in those between years, it can be all too easy to get a little rusty. So, whether you’re new to the car buying process, looking to brush up on your terminology before visiting a dealership, or just want to double check the terms you already know, I hope you enjoy this breakdown of common car buying terms.
If you’re interested in learning more about vehicle financing, we covered the top terms to know when you finance here.
What Do Make, Model, and Trim Mean?
A vehicle’s make refers to the manufacturer or company that made the vehicle. Common manufacturers include Buick, GMC, Nissan, and Lincoln to name a few. Some individuals may refer to a vehicle’s make as its brand.
A vehicle’s model refers to the specific product. Each vehicle manufacturer has a product line, and in it are various models. Take Buick for instance – the Verano, Regal, and LaCrosse are all different models made by a single manufacturer: Buick.
Trim level classifies vehicles based on design and features. It can be helpful to think of trim levels as referring to different versions of a single model. Trim level begins with a base car that comes with standard features. Higher trim levels mean additions or innovations have been made to the base-level car. The highest trim level of a particular model is most often referred to as the luxury version.
What’s the difference between Invoice Price, MSPR, and Actual Price?
Invoice Price is the amount of money the dealership pays the manufacturer for a vehicle. Dealerships cover the operational costs and earn profit by selling a vehicle at a higher price than they bought it.
Commonly known as the sticker price, a vehicle’s MSRP is the suggested retail price as recommended by the manufacturer.
Actual price is the amount of money that a buyer pays for a vehicle. Most people purchase a vehicle at a price somewhere between the MSRP and the invoice price. Sometimes, it is possible to purchase a vehicle at or below invoice price. This can occur when dealerships offer incentives like cash rebates and promotions.
If you’d like some additional ways to prepare for your next car buying experience, check out our free Car Buying 101 eBook where you’ll find countless tips and pieces of advice to have a great experience at any dealership: