| Term |
Definition |
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Late Payment
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A payment made later than agreed upon in a credit contract and on which
additional charges may be imposed.
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Lease
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A means of acquiring the use of the vehicle for a specific period of time in
exchange for regular payments without actually purchasing it. As part of
leasing agreement, the company leasing the vehicle maintains ownership.
During the lease, the lessee or the person leasing the auto is responsible
for its reasonable maintanence. The auto is returned to the company when the
lease expires unless the lessee decides to buy the car, assuming the lease
contract allows for that option.
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Lease Buy Out
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In auto leasing, the option to buy a leased auto usually during the life
of a lease or when the lease ends. You have an option to buy out the lease
only if you have an open-end lease, which is better than a closed-end lease.
Also called an option to buy.
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Lease Fee
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The cost of leasing the vehicle. It equals the monthly lease payment
multiplied by the lease term. See also capitalized cost and residual value.
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Lessee
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The person who leases the vehicle; the consumer.
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Lessor
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The company that grants the lease, such as a dealer, automaker or bank.
The dealer effectively sells the car to the lessor, which then "rents"
it to the consumer.
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Liability on an Account
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Legal responsibility to repay debt.
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Lien
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A claim against a vehicle by another party which utilizes the vehicle as
security for repayment of a loan or other claim. Usually affects the ability
to transfer ownership.
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List Price
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Another term for manufacturer's suggested retail price or sticker price.
List price is the recommended selling price for a vehicle and each of its
optional accessories as defined by the manufacturer.
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Loan terms
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Different requirements of a loan that determine the borrower's and lender's
financial obligations. Common terms are Annual Percentage Rate (APR),
principal, and length of loan. Usually, the better the borrower's credit
history, the better the loan terms. A good combination of loan terms is
simple interest, a low APR and no prepayment penalties.
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Loan-to-Value Ratio (LTV)
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A ratio determined by dividing the sales price or appraised value into the
loan amount, expressed as a percentage. For example, with a sales price of
$10,000 and an auto loan of $8,000, your loan-to-value ratio would be 80 percent.
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Lock-In
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A commitment you obtain from a lender assuring you a particular interest
rate or feature for a definite time period. Provides protection should
interest rates rise between the time you apply for a loan, acquire loan
approval and close the loan and receive the funds you have borrowed.
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