Dealer-speak glossary
The words in dealer earnings calls, sales reports and the F&I office, each with what it means for you. Type to filter.
GPU (gross profit per unit) PVR, front-end gross
What a dealer makes on one vehicle before expenses: selling price minus what the car cost the store (invoice less holdback and incentives, or the used-car purchase price plus reconditioning). Public dealers report it every quarter.
For you: Falling new-car GPU means stores are discounting to move metal; rising used GPU means trade-ins are being bought cheap. Lithia's Q3 used GPU was $1,970. Related →
F&I (finance and insurance) back end, the box
The office where the paperwork is signed and where the store sells the loan, the extended warranty (service contract), GAP, tire-and-wheel and paint protection. Its profit per vehicle is reported as F&I per unit; $1,700–$2,500 is typical at public groups.
For you: Everything in the F&I office is optional and negotiable, including the interest rate markup. Arrange financing before you shop and compare. Related →
Dealer reserve (rate markup) participation, reserve
The lender approves you at a buy rate; the dealer can add up to 1–2.5 points and keep most of the difference as profit.
For you: Ask for the buy rate or bring a pre-approval; a 2-point markup on a $40,000 72-month loan costs about $2,700. Related →
Holdback
A percentage of MSRP (often 2–3%) the manufacturer pays the dealer after the sale. It means "invoice price" still has profit in it.
For you: A deal "at invoice" is not a deal at cost. Holdback is the dealer's to keep, but it explains how below-invoice deals happen.
Invoice vs MSRP sticker, Monroney
MSRP is the suggested retail price on the window sticker (Monroney label). Invoice is what the dealer paid the factory, before holdback and dealer cash.
For you: Negotiate from invoice up, not MSRP down, and use the incentive list for the month.
Dealer cash spiff, factory-to-dealer incentive
Money the manufacturer pays the dealer, not the customer, for selling a specific model. Unlike rebates it is rarely advertised.
For you: If a slow model has dealer cash, there is room below the advertised price. Check the brand's incentive bulletins or ask directly. Related →
Floorplan floor plan interest, curtailment
The line of credit a dealer uses to buy inventory. Interest is charged daily until each car sells; at 7–8% a $50,000 truck costs the store about $300 a month to sit.
For you: Cars that have been on the lot 60+ days cost the dealer money every day; aged inventory is where discounts live. Related →
Day supply days' supply
Inventory on hand divided by the daily selling rate. 60 is normal; 100+ is bloated; under 30 is tight.
For you: Brands above 90 days of supply are discounting; brands under 40 are not. Watch the monthly sales scoreboard. Related →
SAAR seasonally adjusted annual rate
The month's sales scaled to a full year after removing seasonal patterns. 16 million is a healthy US market; 17 million was 2019.
For you: A falling SAAR means softer demand and better deals; a rising one means tighter inventory. Related →
ATP (average transaction price)
What buyers actually paid, on average, after incentives and options. Kelley Blue Book publishes it monthly; it has been near $50,000 for new vehicles.
For you: ATP minus MSRP tells you how much discounting is normal for that brand this month. Related →
Trade allowance vs ACV actual cash value, over-allowance
ACV is what the dealer really thinks your trade is worth. The allowance is the number they show you, which can be inflated while the new-car price is raised to match.
For you: Get an outside offer (CarMax, Carvana, another dealer) first. Negotiate the new-car price and the trade separately.
Negative equity upside down
Owing more on your current loan than the car is worth. It gets rolled into the new loan and you pay interest on it for years.
For you: Check your payoff and your car's value before shopping; rolling in $8,000 adds about $130 a month over 72 months. Related →
Money factor lease rate
The interest rate on a lease written as a decimal. Multiply by 2,400 to get the APR: 0.00250 is 6.0%.
For you: Ask for the money factor and compare it with your pre-approved APR; leases are marked up the same way loans are. Related →
Residual value
The predicted value of the car at lease end, set by the bank as a percentage of MSRP. A higher residual means lower payments.
For you: Shop leases on residual plus money factor, not the monthly payment, which can be lowered with a bigger down payment. Related →
Doc fee documentation fee, processing fee
A dealer-set charge for paperwork. Capped by law in some states ($85 in California); $500–$900 in others.
For you: Usually not removable, but the price can be lowered to offset it. Compare the doc fee when comparing dealers. Related →
Addendum / market adjustment ADM, dealer markup
A second sticker adding dealer-installed accessories or a "market adjustment" above MSRP, common on hot models.
For you: Entirely negotiable. Walk away or shop a dealer without one; the manufacturer does not get any of it.
Front end vs back end
Front end is profit on the vehicle itself; back end is F&I products and rate markup. Many deals lose money on the front end and make it in the back.
For you: A great price can be undone in the F&I office. Decide on products before you go in. Related →
Pack lot pack, reconditioning pack
A fixed amount added to a used car's cost before the salesperson's commission is calculated, covering reconditioning and overhead.
For you: It means the salesperson's "cost" is above the real cost; there is room below the number you are shown.
Four-square
A worksheet that mixes price, trade, down payment and monthly payment on one page so a change in one hides a change in another.
For you: Negotiate one number at a time: price first, then trade, then financing.
Payment packing
Quoting a monthly payment that quietly includes add-on products, so the buyer thinks the base payment is higher than it is.
For you: Ask for the out-the-door price and the APR; compute the payment yourself. Related →
Out-the-door price OTD
The total you pay: vehicle price, taxes, title, registration and every fee. The only number that matters when comparing dealers.
For you: Get it in writing by email before you visit; it exposes doc fees and addendums. Related →
CPO (certified pre-owned)
A used car inspected and warrantied by the manufacturer, sold only by franchised dealers of that brand, for a premium of roughly $1,000–$2,500.
For you: Worth it for brands with expensive repairs; compare the CPO warranty terms, which differ widely.
Manheim index used vehicle value index
Cox Automotive's monthly measure of wholesale used-car prices at auction. Dealers buy trade-ins and auction cars against it.
For you: When Manheim falls, trade offers fall within weeks; when it rises, sell your used car first. Related →
Allocation / turn and earn
Factories send more hot models to dealers that sell their stock fastest. Dealers protect allocation by not sitting on cars.
For you: Dealers with weak allocation have fewer hot models and more markup; big-volume stores usually price closer to MSRP.
Incentive spend
What the manufacturer spends per vehicle on rebates, subvented rates and dealer cash. Cox and J.D. Power publish it monthly; $3,000–$4,000 is typical now.
For you: Rising incentive spend is the clearest signal that deals are improving for a brand. Related →
Subvented rate captive financing
A below-market APR (0–2.9%) funded by the manufacturer through its finance arm, usually in place of a cash rebate.
For you: Compare the subvented rate with the rebate plus your bank's rate; the loan comparison calculator does the math. Related →
GAP insurance
Covers the gap between what you owe and what the car is worth if it is totaled. Sold in F&I for $500–$900; many insurers sell it for a few dollars a month.
For you: Worth having with a small down payment or a long loan, but buy it from your insurer, not the dealer.
VSC (vehicle service contract) extended warranty
A repair contract sold in F&I. Dealer markup is often 50–100% and the price is negotiable; it can be bought later, from the brand's own program, often cheaper.
For you: Never let it be rolled into the loan without asking the price separately; you pay interest on it.
Same-store sales
Revenue at stores open more than a year, excluding acquisitions. The honest growth number in dealer-group earnings.
For you: Same-store growth below inflation means the group is pushing volume with discounts. Related →
CSI (customer satisfaction index) survey
The post-sale survey score the manufacturer uses to rank dealers and pay bonuses.
For you: Dealers care about it; a fair request before the survey is often honored.
Buy here, pay here BHPH
Used-car lots that finance buyers directly, usually at 20%+ APR with weekly payments and GPS trackers.
For you: For credit-challenged buyers a credit union or captive lender is almost always cheaper; check the APR. Related →
LTV (loan-to-value)
Loan amount divided by the car's value. Above 120% is common when negative equity and products are rolled in and is where lenders start to price harshly.
For you: Keep LTV under 100% with a down payment; the rate and the approval both improve. Related →
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