Buying a New Car: Common Terms Used in Car Dealerships
23/04/2024
Here's a breakdown of common phrases, acronyms, and words you might encounter on the forecourt, helping you make informed decisions without feeling lost in the language:
Clocked/Clocking
Altering a vehicle's odometer to make it appear as if it has fewer miles than it actually does, a practice known as clocking. This can inflate the value of used cars.
Deposit Contribution
A sum offered by manufacturers to customers purchasing a car on finance, deducted from the overall finance package, such as Hire Purchase (HP) or Personal Contract Plan (PCP).
Depreciation
The decline in value of a vehicle over time, except for rare classic cars. Depreciation is the difference between the purchase price and the resale value.
Ex-demo
Vehicles used by dealerships for test drives. These cars, if sold, are often priced lower than new models and typically have low mileage and good maintenance records.
Full Service History
A comprehensive record of a used vehicle's maintenance, typically with stamped service entries in line with the manufacturer's schedule.
GAP Insurance
Insurance covering the shortfall between the payout from your insurer for an incident and the remaining balance on your finance agreement.
GMFV
Guaranteed Minimum Future Value, an estimate by finance companies of a car's worth at the end of a PCP contract, considering depreciation.
Hire Purchase (HP)
A financing method where you pay a deposit followed by monthly payments until you own the vehicle.
Leasing
A long-term rental plan where you pay an upfront deposit and monthly instalments for vehicle use, returning the vehicle at the end of the agreement.
Lemon
A car with multiple manufacturing defects and recurring problems.
Part-Ex or Part Exchange
Using your old vehicle as part payment for a new one.
Personal Contract Purchase (PCP)
A finance option with monthly payments and an optional balloon payment at the end, allowing you to keep the vehicle or return it.
Pre-Reg
Pre-registered vehicles bought by dealers and registered in their name, often offered at discounted prices.
Residual Value
The value of a vehicle after a period of depreciation, indicating its retained worth over time.
This article is designed to offer general advice and may not apply to every insurance, broker, insurer, cover or policy. You would need to check the individual policy benefits of each cover with your insurer or broker.
