Car Buying/Leasing
lessee
A party that has made contractual arrangements to use another party's asset for a period at an agreed price.
monroney sticker
A window sticker, required by law to be placed on every new vehicle, includes information such as MSRP and fuel economy
excess-wear charge
a charge the lessee has to pay to refurbish the car for any damage that goes beyond normal use. This means you're allowed some wear and tear to be showing on the vehicle, but not any more than a manufacturer deems is OK.
lease extension
a continuation of tenancy under the original lease.
lease
a contract granting use or occupation of property during a specified time for a specified payment
dealer prep fees
a dealer will try to charge for preparing the vehicle for sale. It's a ridiculous attempt at making extra profit because vehicle preparation is simply a part of doing business.
documentation fee
a fee charged by car dealerships to process a vehicle's paperwork. Covers the cost of all the dealership's back-office employees, from the people who handle the money to the employees who deal with the title, registration and the DMV.
rebate
a partial refund of the price of a product
dealer
a person or company that buys and sells things for profit
down payment
a portion of the total cost of an item that must be paid at the time of purchase
mileage limit/allowance
a term the IRS uses to refer to the deductibility of expenses car owners accrue while operating a personal vehicle for business, medical, charity, or moving purposes.
extended warranty
additional coverage that you can buy to pay for repairs or replacements needed beyond the original warranty period
trade in value
amount the dealer gives you for the car you're providing as partial payment for the car you wish to purchase
excess-mileage charges
charge for driven distance that exceeds maximum allowed mileage
up front costs
costs when signing a lease---deposit, taxes, and registration fees
default
failure to pay back a loan
dealer invoice
includes the price the factory charges for the car and the price of any optional accessories.
MSRP
manufacturer's suggested retail price
acquisition fee
payment to cover the cost of setting up a lease
sell rate
refers to the exchange rate used by the bank to sell exchange to customers
sticker/asking price
sticker price refers to the price displayed on a car's window. It's also called manufacturer's suggested retail price (MSRP). Buyers usually treat the sticker price as an asking price and try to negotiate a discount. That usually works.
destination charge
the cost of shipping a vehicle from the factory to the dealer
financing costs
the cost, interest, and other charges involved in the borrowing of money to build or purchase assets.
fixed residual
the estimated value of a fixed asset at the end of its lease term or useful life.
residual value
the expected value of a depreciable asset at the end of its useful life
closed-end lease
A contract that allows you the use of property, such as a vehicle, for a set time period by making a specified number of payments.
lessor
A party that has agreed contractually to let another party use its asset for a period at an agreed price.
prepayment penalties
Additional money charged by a lender for the borrower paying a loan off early.
open end lease
An automobile lease under which the estimated residual value of the car is used to determine lease payments; if the car is actually worth less than this value at the end of the lease, the lessee must pay the difference.
capitalized cost reduction
An up-front payment, made when leasing a vehicle, that results in a lower monthly fee.
early termination fee
a charge levied when a party wants to break the term of an agreement or long-term contract.
annual percentage rate
Cost of borrowing money on an annual basis; takes into account the interest rate and other related fees on a loan.
finance rate
Percent charged for borrowing money
principal
The amount of money borrowed
term
The length of a lease or loan.
termination fee
The money you pay if you choose to end an auto lease early
buyout price
This is an auction where the seller sets a price at which participants can choose to buy the item if they wish. The buyout price may stay the same throughout the auction, or increase in relation to bids placed.
pre qualify
To have a lender confirm you are eligible for a loan without you committing to accepting it.
cost of funds
the price (interest rate) that a financial institution must pay for the use of money.
fair market value
the price a willing buyer would pay a willing seller in a free market
upside down
you currently owe your finance lender more than your car is currently worth.