The loss in the value of an asset such as an automobile that occurs over its period of ownership;
calculated as the difference between the price initially paid and the subsequent sale price.
An agreement to purchase an automobile that states the offering price and all conditions of the
offer; when signed by the buyer and the seller, the contract legally binds them to its terms.
An arrangement in which the lessee receives the use of the car (or other asset) in exchange for
making monthly lease payments over a specified period.
The most popular form of automobile lease, often called a ‘walk-away’ lease because at the end of
its term the lessee simply turns in the car, assuming the preset mileage limit has not been exceeded
and the car hasn’t been abused.
An automobile lease under which the estimated residual value of the car is used to determine lease
payments, if the car is actually worth less than this value at the end of the lease, the lessee must pay
The remaining value of a leased car at the end of the lease term. Capitalized Cost
The price of a car that is being leased.
A price specified in a lease at which the lessee can buy the car at the end of the lease term.
A form of direct ownership of an individual unit in a multiunit project in which lobbies, swimming
pools, and other common areas and facilities are jointly owned by all property owners in the
Cooperative Apartment (co-op)
An apartment in a building in which each tenant owns a share of the corporation that owns the
Rental Contract (lease agreement)
A legal instrument that protects both the lessor and the lessee from an adverse action by the other
party; it specifies the amount of the monthly payment, the due date, penalties for late payment, the
length of the lease agreement, deposit requirements, fair wear and tear definitions and provisions,
the distribution of expenses, renewal options and early termination penalties, and any restrictions
on children, pets, subleasing or using the facilities.
A portion of the full purchase price provided by the purchaser when a house or other major asset
is purchased; often called equity.
The maximum percentage of the value of a property that the lender is willing to loan.
Mortgage Loan Insurance
An insurance policy that protects the mortgage lender from loss in the event the borrower
defaults on the loan: It is required by federally-regulated lenders when the down payment is less than 25 percent of the purchase price of the home. Its intent is to encourage loans to home-buyers
who have very little money available for a down payment and closing costs.
All expenses that borrowers ordinarily pay at the time a mortgage loan is closed and title to the
purchased property is conveyed to them.
Gross debt service (GDS) ratio
The ratio of the borrower’s monthly housing costs (mortgage payments, heating costs, and taxes)
to their monthly gross income.
Total debt service (TDS) ratio
The ratio of the borrower’s total debt service costs (housing costs plus other debt service) to their
monthly gross income.
Taxes levied by local gover