Finance Basics
The tax paid on goods and services, which can be paid monthly or upfront.
What is Sales Tax?
A person who agrees to lease the vehicle and is primarily responsible for it.
Who is the Lessee?
A type of loan that accrues interest on a daily basis based on the outstanding principal balance.
What is Simple Interest?
A fee charged to the lessee if they exceed the Mileage Allowance listed in the lease agreement.
What is Excess Mileage?
To end the lease early or at maturity.
What is Termination?
This fee is specified in the lease contract and is payable at lease-end if the lessee does not purchase the vehicle.
What is Principal?
The estimated value of the vehicle at the end of the lease term.
What is Residual Value?
A loan used to pay off the existing balance on a current car loan.
What is a Balloon Loan?
A fee specified in the lease contract, payable at lease-end if the lessee does not purchase the vehicle.
What is the Disposition Fee?
The length of the loan or lease, usually broken down into months.
What is the Term?
A formal written application or request for credit.
What is a Credit Application?
Wear and tear on a leased vehicle that exceeds what is allowed per the lease agreement.
What is Excess Wear & Use (EWU)?
A contract signed for retail and balloon products.
What is a Retail Installment Sales Contract?
A form of taxation on personal property, including motor vehicles, in various states.
What is Property Tax?
A contract signed specifically for leased products.
What is a Lease Agreement?
The yearly rate of interest on a loan or lease.
What is Annual Percentage Rate (APR)?
A lump sum payment made at the end of the lease.
What is a Balloon Payment?
A person jointly responsible for repaying a retail loan.
Who is the Co-Buyer?
The dollar amount due each month to repay a credit agreement.
What is the Monthly Payment?
A fee the lessee pays for wear and tear beyond normal use.
What is Excess Wear & Use?
The cost of borrowing money from a lender.
What is a Finance Charge?
The method a dealer uses to report the return of a leased vehicle.
What is Grounding?
The reduction in the value of a vehicle over time due to normal wear and use.
What is Depreciation?
The tax charged on personal property or goods and services.
What is Sales Tax?
The process of ending a lease and returning the vehicle to the dealership.
What is Grounding?