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major purchases

TermDefinition
Acquisition Fee A fee charged by a lessor to cover the expenses incurred in arranging a lease.
Closed End Lease This type of lease allows you to simply return your vehicle at the end of the lease and have no other responsibilities other than possible payment of excessive damage or mileage charges.
Collateral something pledged as security for repayment of a loan, to be forfeited in the event of a default.
Dealer Incentives a way for car manufacturers to get rid of too much inventory.
Deficiency a lack or shortage.
Depreciation Fee The value of an asset net of all accumulated depreciation that has been recorded against it.
Early Termination a charge levied when a party wants to break the term of an agreement or long-term contract.
Finance Charge any fee representing the cost of credit, or the cost of borrowing.
Fixed Rate Loan where the interest rate doesn't fluctuate during the fixed rate period of the loan.
Inception Fees Lease inception cash includes first month’s payment, tag and title fees, down payment (cap cost reduction), sales tax on the down payment, and possibly a security deposit.
Installment Loan loan that is repaid over time with a set number of scheduled payments; normally at least two payments are made towards the loan.
Invoice Price The manufacturer's initial charge to the dealer including freight, destination or delivery charges.
Lease a contract by which one party conveys land, property, services, etc., to another for a specified time, usually in return for a periodic payment.
Lessee a person who holds the lease of a property; a tenant.
Lessor a person who leases or lets a property to another; a landlord.
Mileage Allowance A deduction of automobile expenses for people using their vehicles for business, charity, moving, medical or any other purpose that qualifies for a deduction.
Mileage Charge amount of money you must pay for each mile you go over on your lease.
Money Factor The alternative method of presenting the amount of interest charged on a lease with monthly payments.
MSRP The amount of money for which the company that produces a product recommends that it be sold in stores.
Open End Lease A rental agreement that obliges the lessee (the person making periodic lease payments) to make a balloon payment at the end of the lease agreement amounting to the difference between the the residual and fair market value of the asset.
Purchase Option An option in a lease agreement that allows the lessee to purchase the leased asset at the end of the lease period at a price substantially below its fair market value.
Rebates returns a fixed amount of money to a buyer for the purchase of a particular vehicle.
Residual Value is another name for salvage value, the remaining value of an asset after it has been fully depreciated
Secured Loan which the borrower pledges some asset (e.g. a car or property) as collateral for the loan, which then becomes a secured debt owed to the creditor who gives the loan.
Trade-In Value A statistical method used to estimate the sources of value added when producing goods and services for export and import.
Unsecured Loan A loan that is issued and supported only by the borrower's creditworthiness, rather than by a type of collateral.
Upside Down when you owe more than the vehicle is worth.
Variable Rate Loan any type of debt instrument, such as a loan, bond, mortgage, or credit, that does not have a fixed rate of interest over the life of the instrument.
Warranty a written guarantee, issued to the purchaser of an article by its manufacturer, promising to repair or replace it if necessary within a specified period of time.
Created by: grosario18