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Jargon: Looking under the hood of car industry terminology

Welcome to another episode of Jargon, the new show from Digital Trends that deciphers the complex jargon of various industries into words and concepts the rest of us can understand. We’re live each week on Tuesdays with a new set of jargon from a different industry.

On this episode, host Myq Kaplan chauffeurs you through the concepts that might confuse you when buying a car. He’s joined by Matt Dundas, associate director of finance at Carvana, to talk about trends in the car industry and the pitfalls that await prospective buyers (Carvana also provides vending machines filled with cars).

We’ll be looking under the hood of these jargon terms:

MSRP — Stands for Manufacturer Suggested Retail Price, aka sticker price. It’s what the carmaker tells dealerships they ought to sell a particular vehicle for. Rarely is it what you will actually pay, however. “Sometimes, cars will actually sell for close to MSRP,” Dundas explains, “but it’s just another tool to [have the dealer] say, ‘Look, MSRP’s this and I lopped off $20,000.’”

Blue Book Value — The price that cars are actually going for, rather than what manufacturers say it is worth. “Kelly Blue Book used to produce this little blue book,” Dundas says, “and you could buy it, flip through it, and see what the prices have been recently for the car you’re interested in. Obviously that’s now all online, but you can now look for the specific car you want to buy, and you’ll actually get a book value that’s based on real transactions, what are people actually paying.”

Car title — The certificate of ownership for a car, which includes information about the make and model, mileage, and identification number, as well as the injury history of the car. Cars that have never had any issues have a clean title. If a car has been totaled, it has a “salvage” title, and a car that was totaled and repaired has a “rebuilt” title. Once a car has a “rebuilt” title, that mark stays with the car forever, like those embarrassing photos your roommates took of you the first time you tried rum in college.

Capitalized cost — The price that you agree upon with a dealer to lease a car. Despite their widespread reputations as honest brokers, car dealers often try to slip in unnecessary fees during negotiations. As Dundas explains, “There’s a lot of fees that, if you haven’t been through the process before, can kind of sneak up on you at the end.” Among these fees are the Document Fee, which is the egregiously high fee they charge to print out the documents involved in the deal, or the drive-off fee, which a dealer might charge you to drive the car you just bought off the lot.

Gap insurance — When you buy a car, it immediately starts to lose value, and if you total it, this can cause some financial problems for you. “If you total your car, you could find that maybe you owe $18,000 on your loan, but you only got a check from the insurance company for $16,000 — now you’re $2,000 underwater and you still have to pay that $2,000” Dundas explains. Gap insurance essentially adds “a few more dollars to your loan payment, and if this happens to you, you don’t need to worry about paying out of pocket for this $2,000.”

On next week’s episode, we take to the metaphorical skies to fly through the esoteric world of cloud computing.

For past episodes of Jargon, go to

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