Used Cars Terms and Definitions

Base monthly payment The portion of the monthly payment that covers depreciation any amortized amounts and rent charges calculated by adding the amount of depreciation any other amortized amounts and rent charges and dividing the total by the number of months in the lease. Monthly sales/use taxes and other monthly fees are added to this base monthly payment to determine the total monthly payment. Trade-in The net value of your vehicle credited toward the purchase or lease of another vehicle. If you own the vehicle being traded in you sell it to the dealer or lessor. If you are leasing the vehicle being traded in you are turning in the vehicle either at the scheduled end of the lease or upon early termination to the dealer or lessor who has agreed to pay any remaining balance on your agreement. Insurance verification The process of obtaining verbal or written confirmation of required coverage from your insurance agent or company. Full-maintenance lease A lease in which the lessor or assignee assumes responsibility for all manufacturer-recommended maintenance and service on the vehicle. The lease may also cover additional mechanical repairs and servicing during the term of the lease. The cost of this service usually is included in the gross capitalized cost or is added to the base monthly payment. Consumer lease A lease of personal property to an individual to be used primarily for personal family or household purposes for a period of more than 4 months and with a total contractual obligation of no more than $25000. A lease meeting all these criteria is covered by the Consumer Leasing Act and Federal Reserve Board Regulation M. Acquisition fee A charge included in most lease transactions that either is paid up front or is included in the gross capitalized cost may be called a bank fee an administrative fee or an assignment fee. This fee usually covers a variety of administrative or insurance costs. Independent leasing company A leasing company that offers leases directly to consumers and businesses and is generally not affiliated with a particular automobile manufacturer. Federal Reserve Board The federal agency with rule-writing authority for the Truth in Lending Act of which the Consumer Leasing Act is part officially known as the Board of Governors of the Federal Reserve System. T Service contract A contract you may purchase to cover such expenses as the repair or replacement of vehicle components and in some cases related services such as towing or replacement rental cars. Consumer Leasing Act A 1976 amendment to the federal Truth in Lending Act that requires disclosure of the cost and terms of consumer leases and also places substantive restrictions on consumer leases. See Consumer lease.

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	Did You Know?
	Rights To A Refund Dealers are not required by law to give used car buyers a three-day right to cancel. The right to return the car in a few days for a refund exists only if the dealer grants this privilege to buyers.