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Equity
The positive difference between the trade-in or market value of a vehicle and the loan payoff amount, in an installment sale or loan. The equity is the market value of the vehicle when the loan is paid off.
Escrow
The residual value of a business or property beyond any mortgage thereon and liability therein.
Excess Mileage Charge
A charge by the lessor for miles driven in excess of the maximum specified in the lease agreement. The excess mileage charge is usually between $0.10 and $0.25 per mile. For example, a lease specifies a maximum of 36,000 miles and a charge of $0.15 per mile over the maximum. If the lessee drives 37,000 miles, the excess mileage charge will be $0.15 x 1,000, or $150.
Excess Wear and Tear Charge
Amount charged by a lessor to cover wear and tear on a leased vehicle beyond what is considered normal. The charge may cover both interior and exterior damage, such as upholstery stains, body dents and scrapes, and tire wear beyond the limits stated in the lease agreement.
Fair Market Value
The current value of a particular vehicle in the marketplace, based on mileage, exterior and interior condition, mechanical fitness, etc.
Financing
The management of money, banking, investments, and credit.
Foreclosure
A legal proceeding that bars or extinguishes a mortgagor's right of redeeming a mortgaged estate.
Franchised Dealer
A licensed vehicle dealer authorized to sell and service a specific brand of new vehicles.
Gap Protection
A type of insurance covering the amount owed due to early termination of a lease agreement that is not covered by auto insurance. Involuntary early termination of a lease may occur when a car is stolen or significantly damaged in an accident. The actual cash value of the car paid by auto insurance may not be adequate to pay the lease payoff balance and early-termination penalties.
Gross Income
For qualifying purposes, the income of the borrower before taxes or expenses are deducted.
Home Equity Line of Credit
A loan providing you with the ability to borrow funds at the time and in the amount you choose, up to a maximum credit limit for which you have qualified. Repayment is secured by the equity in your home. Simple interest (interest-only payments on the outstanding balance) is usually tax-deductible. Often used for home improvements, major purchases or expenses, and debt consolidation.
Incentives
A form of reward offered to boost sales; a special price reduction or rebate from vehicle manufacturers to influence the sale of a particular model.
Independent Dealer
A used vehicle dealer who is not associated with a manufacturer.
Insurance
Coverage by a contract binding a party to indemnify another against specified loss in return for premiums paid.
Interest: A charge for a loan, usually a percentage of the amount loaned.
Interest Rate
The percentage of a sum of money charged for its use.
Kelley Blue Book
A publication that lists retail prices and retail trade-in values of used vehicles.
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