Auto Finance Dictionary

Whether you're buying or leasing your next car, the process can feel overwhelming, especially if you're not familiar with all the industry jargon.

 

Here's a quick list of a few key terms to get you started:

 

Acquisition Fee: The dealer will set a fee for initiating a lease to cover the cost of processing, credit reports, insurance verification, etc.

 

Adjusted Cap Cost: In a lease, this is the price of a vehicle plus any add-ons and minus the capitalized cost reduction.

 

APR: Your Annual Percentage Rate is the interest rate of your loan and can apply to both purchases and leases. It is a percentage of how much you've borrowed from the lender.

 

Buyout Price: The cost of the vehicle if you intend to purchase it outright at the end of your lease.

 

Closed-End Lease: Most leases are offered as "Closed-End," which means you can either buy the lease at the end of its term or leave it without responsibility for any decrease in the vehicle's overall value.

 

Default: Whether in a lease or a purchase, if you fail to make your payments, you are "defaulting" on your contract terms.

 

Early Termination Fees: If you end your loan or lease before the contracted term, you will charged with an Early Termination Fee.

 

Equity Lease: Also called an "Open-End Lease," this means you must buy the vehicle at the end of its lease.

 

Guaranteed Residual: At the start of the lease, the dealer and the lessee agree upon the price at which the lessee will purchase the vehicle at the end of its lease.

 

Mileage Allowance: Total mileage allowed during the entire lease term

 

MSRP: Manufacturer's Suggested Retail Price

 

Principal: The amount you have borrowed.

 

This list is just the beginning; feel free to contact us with any questions!

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