Car Buying Terms 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 new vehicle about every six years and in those between years, it can be all too easy to fall out of the car business lingo. 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 find this breakdown blog helpful. It’s what we’re here for.

If you're interested in learning more about vehicle financing, we cover that topic in-depth on our site here.

What Do Make, Model, and Trim Mean?

Make

A vehicle's make refers to the manufacturer or company that made the vehicle. Common manufacturers include Ford, Chrysler, Dodge, and Jeep to name a few. Some individuals may refer to a vehicle's make as its brand.

Model

A vehicle's model refers to the specific product the make or brand features. Each vehicle manufacturer has a product line, and in it are various models. Take Jeep for instance - the Cherokee, Grand Cherokee, Wrangler, Compass, and Renegade are all different models made by a single manufacturer: Jeep.

Trim

Trim level classifies vehicles based on design and features. It’s a granular level of the vehicle’s package. 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. The higher the trim, the more additions, special add-ons, 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

Invoice price refers to 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.

MSRP

Commonly known as the sticker price, a vehicle's MSRP is the suggested retail price as recommended by the manufacturer.

Actual Price

Actual price is the amount of money that a buyer like yourself 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.

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