Glossary

A

Adjusted Capitalized Cost
In a vehicle lease, the gross capitalized cost less the capitalized cost reduction, and the amount used by the lessor in calculating the base periodic payment.
Adverse Action
A denial or revocation of credit. A refusal to grant credit substantially on the terms or amount requested. Can also mean a change in the terms of an existing credit arrangement.
Annual Percentage Rate (APR)
A required Truth in Lending Act disclosure for consumer loans. It is a calculation of the cost of credit as a yearly rate and shown as a percentage. It is often higher than the interest rate because it incorporates prepaid finance charges that are not interest.
Assignee
The party to whom the dealer transfers the retail installment sale contract or lease. A lender may transfer a loan agreement or note secured by the vehicle to a third party.

C

Capitalized Cost Reduction
In a vehicle lease, the total amount of any rebate, cash payment, net trade-in allowance, and noncash credit that reduces the gross capitalized cost (see adjusted capitalized cost).
Closed-End Lease
A vehicle lease in which the lessee is not liable for the difference between the estimated residual value and the realized value of the vehicle at the end of the lease term.
Credit File
All of the information on a consumer recorded and retained by a consumer reporting agency, regardless of how it is stored.
Credit Report
A written, oral or other communication of information by a consumer reporting agency on a consumer's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living, which is used or collected for the purpose of servicing as a factor in establishing (among other things) a consumer's eligibility for credit or insurance.
Credit Score
A numerical value or a categorization derived from a statistical tool or modeling system used to predict the likelihood of certain credit behaviors (for example, that you will repay the loan or contract on time, and in full). Credit scoring models differ among consumer reporting agencies and lenders, but generally, the higher the score, the more credit worthy the consumer. For example, a credit score of 820 is very high, whereas a score of 650 is considered a low score. Key factors (relevant elements or reasons) affect the score, for example, how many times a payment is late, and how many creditors a consumer has.

E

Estimated Residual Value
In a vehicle lease, the value of the leased vehicle at the end of the lease term, as estimated or assigned at consummation by the lessor, and is used in calculating the base periodic payment.

F

F&I Representative
An employee at a dealership that handles the finance and insurance matters of the vehicle purchase or lease transaction.

G

Gross Capitalized Cost
In a vehicle lease, the amount agreed upon by the lessor and the lessee as the value of the leased vehicle, and any items that are capitalized or amortized during the lease term, including but not limited to taxes, insurance, service agreements, and any outstanding prior credit or lease balance on a trade-in vehicle.

O

Open-End Lease
A vehicle lease in which the lessee is liable for the difference between the estimated residual value and the realized value of the vehicle at the end of the lease term

R

Realized Value
In a vehicle lease, (1) the price received by the lessor upon the disposition of the leased vehicle, or (2) the highest offer received by the lessor for disposition of the leased vehicle, or (3) the fair market value of the leased vehicle at the end of the lease term. In the case of a total loss of the vehicle (damage, destruction or theft), the realized value is usually equal to the insurance proceeds paid by the insurance the lessee maintains on the lease vehicle.

S

Subject to Approval; W.A.C.
With Approved Credit. A requirement by a dealer that a transaction is conditioned on the customer receiving adequate financing to complete the transaction.