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Extended Warranty
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Sold by manufacturers and independent companies (dealerships), this is a contract that covers specified breakdowns after the original warranty from the manufacturer expires.
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Secured Loan
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A loan in which a borrower pledges an asset, such as a car or property, as collateral for the loan. This then becomes the secured debt owed to the creditor who makes the loan.
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Leased Vehicle
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Vehicle that is owned by a leasing company, to which the lessee makes payments. At the conclusion of the lease, the vehicle must be returned to the lessor. Leased vehicles require certain levels of insurance coverage, stipulated by the leasing company.
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Gross Capitalized Cost
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Also referred to as the capitalized cost, or simply the cap cost, this term is the total amount of money being financed to lease a vehicle. This is the final number after all taxes, fees, and whatever balance is left for any trade-ins. Many dealerships associate the cap cost and the adjusted cap cost as being the same thing; however, the cap cost is technically the total amount being financed without the rebates and down payments factored in.
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Consumer Credit
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Refers to credit that is extended to a consumer, primarily for personal, family, or household purposes, such as credit to buy a car.
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Occasional Driver
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A person who is not the primary or principal driver of the insured vehicle is referred to as the occasional driver.
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Lien
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A claim, encumbrance, or charge on property as security for the payment of debt.
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Sport-tuned suspension
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A term that describes a vehicle that has a firmer, more tuned suspension. It generally provides better handling and traction than traditional suspension.
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MSRP
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Manufacturer's Suggested Retail Price. This is the price the manufacturer suggests the vehicle be sold at. This price is not set in stone and can often be negotiated.
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Balance
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Amount of money remaining on a loan or debt to be paid back.
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Bill of Sale
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Document that shows details of the sale. A dealership will prepare a bill of sale to document the customer's purchase of a vehicle.
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Usury Law
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This is a law that sets the maximum interest rate lenders can charge on a loan.
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Subsidized Lease
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A subsidized lease is a lease that offers a consumer no monthly payments, or a non-existent interest rate and down payment. Subsidized leases are used most often during lease blowout sales or big sales events to push certain models.
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Wheel Weights
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Small weights, typically made of lead, which are added to the front and rear lip of the rim after the tire is mounted on the rim, to balance the tire.
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Lease Agreement
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This is the term referring to the actual contract signed at the beginning of a lease. This is the Holy Grail of the lease, and both parties should protect their copies once signed. The lease agreement states all terms, fees, mileage allowance, wear-and-tear charges, and definitions, as well as the lease length and financial terms. This is the actual legal document that must be presented in court should the need arise.
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Service Contract
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A contract that provides financial coverage to the borrower to take care of repair costs or replacement for breakdown or mechanical failure as according to the limits of the policy.
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Early Termination Fee
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A fee that is charged if a lease is terminated before its agreed-upon date.
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Sipes
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Sipes are the small slits in the tread blocks of a tire. The sipes allow for better traction by providing a clearance point for water and biting edges for improved traction on slicker surfaces.
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Security Deposit
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The security deposit differs from the down payment in that it is not applied to the overall cost of the lease. The security deposit is given as a safeguard against non-payment of a monthly lease payment. Most security deposits are due back at lease end, however many are kept by the leasing agency and put toward wear-and-tear charges the vehicle accumulates throughout the life of the lease.
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Capitalized Cost Reduction
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This term, also called the cap cost reduction, refers to any down payments, trade-in credits, rebates, cash back or any other amount that reduces to the capitalized cost. Many people would also refer to this simply as the down payment. Cap costs can be given no matter what a consumer's credit rating, and are generally featured as part of some of the best lease deals.
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