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Buy Option
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Most leases have a clause included that provide an option for the lessee to purchase the vehicle at the end of the lease agreement, or during the lease agreement after a certain number of months have passed. The purchase price is not typically set until the time of sale due to mileage and condition variables.
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Kelley Blue Book
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An independent vehicle valuation service. Reports vehicle values by analyzing actual market transactions.
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Lease Payment
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This is the payment amount set in the lease agreement for the lessee to pay for a set number of months. Certain months of payments may be included in the overall down payment as an incentive to lease. This payment is usually found by way of the money factor and determining depreciation via the residual value. It can be lowered with a lower-negotiated MSRP, or by additional down payment resources.
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Delinquency
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Failure of the borrower to make payments on time. Can lead to repossession by a collector on behalf of the lender, who owns the title until the debt is paid in full.
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Refinancing
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Generally applicable to mortgages, refinancing can also apply to vehicles. A borrower can pay off one loan by refinancing with another (or the same) lender and using the proceeds to pay off the original loan.
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Retail Price
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This is the amount that a buyer pays the seller of the vehicle.
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V12
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This is the term which refers to a V-shaped engine with twelve cylinders total, six per bank lined up in a row. V12 engines have two separate cylinder heads.
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Implied Interest
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The implied interest rate is the interest that exists to offset promotional APRs. For example, if a dealership is offering a 1.9% interest rate or $3,000 cash back, the cash back option would come with and interest rate of 4.9%. It is a way of balancing out the incentives given. The dealership determines that the additional 3% interest is equivalent to the $3,000 cash back option. It is basically a way of buying down an interest rate.
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Prepayment
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Provision in a loan that permits a borrower to make advance payments on a loan.
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Qualify
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Refers to a borrower's ability to meet the lender's specified criteria for granting credit.
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Donut
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This term describes a particular type of smaller tire that is used as a temporary spare in automotive applications. Donut tires are not meant for extended use.
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Third-party Agency
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In lease terms, this typically refers to an outside agency that can check on a vehicle's history and verify the title history, accident records, and major recalls or repairs that may exist. An example of a third-party agency would be CarMax. It could also refer to any outside certified technician that can be utilized to inspect the vehicle before the lease agreement is signed.
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Creditworthiness
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Term refers to a person's eligibility to borrow money. This is determined based on the number of accounts the person has opened, his/her payment history and account balances.
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Backup Camera
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A backup camera is a device which can allow the driver to view the area behind the vehicle while in reverse. A tiny camera is mounted on the rear of the vehicle, and the image is displayed on a monitor located on the dashboard.
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Fixed Rate Loan
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A loan in which the interest rate remains fixed throughout the life of the loan.
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Credit Score
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A number which reflects an assessment of risk involved in a credit transaction. Involves evaluating credit quality based on information contained in the borrower's loan application, proposed structure of the loan, and his/her credit report.
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Rollover Rating
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A rating that describes a particular vehicle's risk of rolling over due to being top heavy. It is typically rated on a five-star scale. Five star vehicles have a rollover risk of less than ten percent.
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Dealership
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A company or group of companies (dealer group) authorized by the manufacturer to sell and service its products.
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Release
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Refers to a binding contract stipulating that all obligations arising from a particular incident or occurrence, past, present and future, have been met or fulfilled.
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Policy
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A written agreement between a person and the insurance company that details policy coverage, contract provisions, conditions and amount to be paid for the policy.
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