Car auction: A car auction is where a dealer or auctioneer auctions off a car to the highest bidder. With most places you will usually need to register at the auction prior to bidding, at which time you will be assigned a bidder number. You use that number to bid on the car that you want. The bidder who bids the highest price for the car they want wins the right to purchase that car for the price that they bid.

Dealer: A dealer sells new and used cars as a means of doing business. They can also supply financing and aftermarket services, although it is usually less expensive to seek financing through a loan broker than through a dealer.

Dealer warranty: A dealer warranty is the warranty offered by the dealer. This is usually a limited warranty and will only cover certain repairs for a certain period of time. If you are offered a dealer warranty with the car you are purchasing, make sure you read the terms of the warranty and that you understand them clearly.

Deposit: The deposit is the amount of money that you pay towards the car. You then finance the balance.

Employee package: Some employers have special pricing arrangements with certain dealers. The employee package is the special arrangement your employer has with a certain dealer to give you a special price on the vehicle you are purchasing.

Insurance: Insurance is necessary in order to drive your vehicle. Insurance protects you and other drivers from financial loss in case of an accident.

Lease: When you buy a car and finance it, you own the car and are purchasing it from the dealer. When you lease a car, the leasing company is purchasing the car from the dealer and you are leasing the car from the leasing company for a specified monthly payment over a specified period of time.

Mortgage redraw: With a mortgage redraw, you are using the equity in your home to take out a loan. If this loan is used for purchasing a car, you are using the equity in your home to finance the purchase of the car. While this may offer you a lower interest rate than a traditional car loan, it is also putting your home up as collateral for the purchase of your car.

New car: A new car is a car that has never been owned by a private party. The car has been sent directly to the dealer from the manufacturer and is now for sale to the general public.

Order form: The order form outlines the sales agreement between you and the dealer. Make sure you read the order form completely and that you understand all of the terms and conditions within the order form.

Personal loan: With a traditional car loan, you use the car as collateral for the loan. With a personal loan, there is no collateral. Because of this, interest rates for personal loans are usually higher than interest rates on traditional car loans.

Private sale: With a private sale, the dealer is cut out and you are purchasing a car directly from another private party. This usually happens when an individual doesn’t want to trade their car in at the car dealership when they purchase a new car and the offer their old car for sale to the general public.

Road test: The road test is the drive that you take to see how a car handles and rides. During the road test you will see if you like the car you are testing and you will decide whether or not you would like to purchase the car.

Trade-in: If you have a car that you are no longer going to need when you purchase your new car, you may wish to trade the car in at the dealership. The dealer will assess a value to your car and will deduct that value from the price of the car you are purchasing. You can usually get more for your car by selling it outright to a private party than you can by trading the car in at the dealership.

Used car: A used car is a car that has previously been owned by another party. You can either purchase a used car from a dealership or from a private party. If you purchase a used car from a private party, you may be able to get a better deal but the car may not be covered by any warranty. If you purchase a used car from a dealer, a dealer warranty may be applicable, protecting you in the event something goes wrong with the car.