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    One of the most nerve wracking experiences can be buying a car, mainly because of the seemingly esoteric language the car dealer seems to be speaking. It is commonly known as dealer speak, and it can be especially problematic for new car buyers. While understanding every car buying word, phrase or concept is not necessary, it is a good idea to have a general awareness and understanding of common terminology that might be used at the dealership so that you are not taken advantage of or agree to terms that are not in your best interest.

    Getting to Know the Numbers

    The MSRP, an acronym for Manufacturers Suggested Retail Price, is the base price, or sticker price, posted on the window of a vehicle for sale. Sometimes car shoppers are surprised at the number, because they feel it is too high. Once you have decided on a vehicle you are interested in at a suitable price, the dealer will ask you to pay documentation fees; these are essentially processing fees, covering the cost to the dealer for doing the necessary paperwork to execute the transaction. If the vehicle is new, then a dealer preparation charge will be required of you; this special charge covers the cost to the dealer for preparing the vehicle for sale after it has been received from the factory.

    Another number that can cause surprise is the interest rate, also called the finance rate. This is how much interest-expressed as a percentage and thus called an annual percentage rate-the lender will charge you if you take out a loan on your new vehicle. The APR can be negotiated.

    Car Lease Terms

    If you decide to lease a car, then understand the fundamental terms related to this option. There are two payments the dealer will want you to pay at the outset: the acquisition fees and the down payment. The acquisition fees are what the dealer charges to initiate the process required to check your credit reports and determine what type of financing you qualify for. The down payment is the amount you pay in order to cut down on your finance charges: the bigger the down payment, the lesser the finance charges. When you enter into an agreement to lease a vehicle, you are referred to as the lessee. The finance company that you agree to make specified monthly payments, or lease payments, to in order to have full access to the vehicle is called the lessor; sometimes car companies have their own finance companies, and these are called captives. Since you do not own the vehicle, the lessor is actually the legal owner, or buyer, of the vehicle until you pay the dealer in full for the vehicle, if you so choose. The lease is basically a long-term rental agreement in which you agree to use the car for a predetermined period of time-the lease period or term-or you agree not to exceed an agreed upon mileage limit or allowance, in exchange for making lease payments. Going over the limit will lead to your incurring excess mileage charges. If you decide you no longer want to lease a car before the term ends, then you will have to pay a penalty appropriately called early termination fees.

    When the Lease Ends

    At the end of the lease period, you have the option to either buy the car or return it to the dealer. The type of lease you ideally want from your dealer is a walk-away lease, or closed-end lease. The reason is that this type of lease gives you the right to simply buy the car at the end of the term for a set price or to walk away from the lease at the end of the term and not be liable for any unexpected reductions in the value of the automobile.

    If you want to continue leasing a car after the term expires, you can arrange to do this with the dealer: This prolonging is called a lease extension. If you decide you want to keep the car and buy it outright, then you must pay the buyout price for the car. You must also pay a disposition fee: the price the dealer charges you to return the vehicle to its fleet and restore it to sale condition again.

    After-Purchase Care

    Purchasing an extended warranty ensures you will receive additional car protection after your original warranty-the factory warranty-expires. An extended warranty will state the specific kinds of services and repairs that will be covered on the vehicle you purchase.

    You do not have to be at a loss when making sense of dealer speak. Of course, you may not understand everything being said, but educating yourself on some of the key car buying terms and car leasing terms will enable you to speak intelligently and confidently at your dealership. Get a good APR, or negotiate it if you do not like the one being offered. Negotiate the dealer preparation charge if you are not satisfied with it. If you lease, make sure you get a closed-end lease so you are not stuck with any hidden charges the dealer may try to make you pay.

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