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Major Life Purchases
| Question | Answer |
|---|---|
| Acquisition Fee | a one-time administrative charge paid to a lender or leasing company to set up a new lease contract |
| Closed end Lease | a vehicle rental agreement where you make fixed monthly payments for a set period, then return the vehicle at the end with no responsibility for its final resale value. |
| Collateral | an item of value—like a house, car, or cash—that a borrower pledges to a lender to secure a loan |
| Dealer incentives | special perks or cash bonuses given by car manufacturers to dealerships to help them sell specific vehicles faster |
| Default | the failure to fulfill a legal or financial obligation |
| Deficiency | the state of not having, or not having enough, of something that is needed. |
| Depreciation Fee | accounting method that spreads the high upfront cost of an item over the several years it is expected to be used |
| Early Termination | ending a contract, agreement, or service before its scheduled end date |
| Finance Charge | the total cost of borrowing money or using credit, expressed in dollars and cents |
| Fixed Rate Loan | a loan where the interest rate stays the same for the entire life of the loan. |
| Inception Fees | the initial, upfront costs required to start a car lease agreement, often paid at signing |
| Installment loan | a set amount of money you borrow upfront and pay back over time through regular, fixed payments (installments) |
| Invoice price | the amount a dealer or retailer pays the manufacturer for a product, acting as their "cost" before selling it to you |
| Lease | An oral or written agreement (a contract) between two people concerning the use by one of the property of the other |
| Lessee | a person who holds the lease of a property |
| Lessor | one that transfers property by a contract |
| Mileage allowance | money an employer pays an employee to cover the costs of using their personal car for business travel |
| Mileage Charge | a fee based on the distance a vehicle is driven, usually calculated as a set cost per mile |
| Money factor | the interest rate on a car lease |
| MSRP | Manufacturer’s Suggested Retail Price. It is the price a manufacturer recommends dealers sell a vehicle or product for, often called the "sticker price" or "list price" |
| Open end Lease | a flexible structure often used for commercial fleets, marine equipment, or exotic and luxury vehicles with high or unpredictable usage |
| Purchase option | a right to purchase or lease land or other property interests without any obligation to do so. |
| Rebates | a partial refund of money given back to a customer after they have purchased an item, or a return of money paid |
| Residual Value | an asset's estimated worth at the end of its useful life |
| Secured loan | a type of credit that requires some form of collateral to insure the loan |
| Trade in value | the amount of money a dealership or store offers you for your used item (car, phone, etc.) to put toward the purchase of a new one |
| Unsecured loan | loans that don't require collateral. |
| Upside down | you owe more money on a loan than the item you bought is worth. |
| Variable Rate Loan | a loan where the interest rate can rise or fall over time based on market conditions. |
| Warranty | a binding promise from a seller to a buyer, guaranteeing that a product will function properly for a specific time |
Created by:
Gjimenez27