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Major Purchases
| Term | Definition |
|---|---|
| Acquisition Fee | Fee charged by a lessor to cover the expenses incurred in arranging a lease. Fees may also refer to charges and commissions paid for the acquisition or purchase of property, such as closing costs, real estate commission, and development/construction fees |
| Closed End Lease | A contract-based system governed by law in the U.S. and Canada. It allows a person the use of property for a fixed term, and the right to buy that property for the agreed residual value when the term expires |
| 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. If the car is not sold, they cannot make money on it. Dealer incentives come in two forms: factory-to-dealer and factory-to-consumer |
| Default | Failure to fulfill an obligation, especially to repay a loan or appear in a court of law |
| Deficiency | A lack or shortage |
| Depreciation Fee | Depreciation is a method of allocating the cost of a tangible asset over its useful life. Businesses depreciate long-term assets for both tax and accounting purposes. 2. A decrease in an asset's value caused by unfavorable market conditions |
| Early Termination | A fee that is a charge levied when a party wants to break the term of an agreement or long-term contract. They are stipulated in the contract or agreement itself, and provide an incentive for the party subject to them to abide by the agreement |
| Finance Charge | Any fee representing the cost of credit, or the cost of borrowing. It is interest accrued on, and fees charged for, some forms of credit. It includes not only interest but other charges as well, such as financial transaction fees |
| Fixed Rate Loan | A loan where the interest rate doesn't fluctuate during the fixed rate period of the loan. This allows the borrower to accurately predict their future payments. Variable rate loans, by contrast, are anchored to the prevailing discount rate |
| Inception Fees | Inception fees may include a down payment, security deposit, acquisition fee, first month's payment, taxes or title fees. In order to reduce monthly payments, some lease deals are structured so that a combination of the down payment and assorted fees |
| Installment Loan | A loan that is repaid over time with a set number of scheduled payments; normally at least two payments are made towards the loan. The term of loan may be a few months and as long as 30 years. A mortgage, for example, is a type of installment loan |
| Invoice Price | Is the automobile manufacturer's original charge to the dealer. This includes freight, destination or delivery charges. This price may not reflect the dealer's final cost due to rebates, allowances, discounts and incentive awards the dealer may receive |
| 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 | 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 | Rental car charge for driven distance that exceeds maximum allowed mileage (or kilometers), usually levied on per mile (or kilometer) basis |
| Money Factor | The alternative method of presenting the amount of interest charged on a lease with monthly payments; can be translated into the more common annual percentage rate (APR) interest by multiplying the money factor by 2,400. Also known as a "lease factor" |
| MSRP | Manufacturer's suggested retail price(MSRP) the amount of money for which the company produces a product recommends that it be sold in stores, doesn't necessarily correspond to the price retailers actually use or the price customers are willing to pay |
| Open End Lease | A rental agreement that obliges the lessee 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, called a "finance lease" |
| Purchase Option | Lease agreement under which the lessee has the option of purchasing the leased asset at a specified price at the end of the lease term |
| Rebates | A partial refund to someone who has paid too much money for tax, rent, or a utility |
| Residual Value | The residual value is the amount you can buy the car for at the end of the lease, if you decide you want to purchase the car. It also is an important number in the lease equation, directly affecting your monthly payment |
| Secured Loan | A secured loan is a loan in 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 | (TiVA) 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/supported by the borrower's creditworthiness, rather than a collateral, the loan is obtained without the use of property as collateral for the loan. Borrowers generally have high credit ratings for approval on an unsecured loan |
| Upside Down | Being upside-down on a car loan, means you owe more than the vehicle is worth. In car dealership slang, it simply means that, late in the life of your auto loan, you still owe more money to your car financing organization than the vehicle is now worth |
| Variable Rate Loan | A variable interest rate loan is a loan in which the interest rate charged on the outstanding balance varies as market interest rates change. As a result, your payments will vary as well (as long as your payments are blended with principal and interest) |
| 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:
Hreiman16
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