Amount Financed: The agreed upon sale price of the equipment, plus any charges for taxes, pre-delivery costs, fees, freight, less any deposit payment and/or net trade-in value. This is the amount that is subject to finance charges.
Balloon: A loan that is amortized only down to the expected end-of-term value, with a remaining balance to be paid in a lump sum at the end of the term.
Balloon Payment: Estimated final payment that covers the remaining expected value of the equipment.
Contract Rate: The total amount of finance charges expressed as a true percentage of the declining unpaid balance.
Deposit Payment: The amount of cash or net trade-in value applied to reduce the sales price of the equipment. A deposit payment helps lower your contract repayments as well as establish equity in your equipment.
Early Termination: Ending of the contract before the scheduled maturity date for any reason. The reason may be voluntary or involuntary for example, the equipment is returned early, stolen, damaged beyond repair, or you default on the contract.
Lease: A contract between lessor and lessee for a specified time period and a specific payment. The equipment remains in the name of lessor as owner unless and until the lessee exercises his/her purchase option.
Lessee: The party to whom the equipment is leased. The lessee is required to make payments and to meet other obligations specified in the lease agreement.
Lessor: The person or organization who regularly leases, offers to lease, or arranges for the lease of the equipment.
Purchase Price: The agreed upon value of a financed equipment, between the seller and purchaser. It is also referred to as the sales price.
Purchase Option: An option in a lease that allows the lessee to purchase the equipment during or at the end of the lease term for a specified price disclosed in the lease. A lease agreement may or may not include a purchase option.
Residual Value: The projected value of the equipment at lease end that is used in calculating the monthly payment. The residual value may be higher or lower than the realized value at the scheduled end of lease.
Scheduled Termination: The end of the lease term, as called for in the lease. It is also referred to as the scheduled maturity date.
Term: The duration of the contract, usually expressed in months (e.g. 36 months, 60 months).
Trade-In Value: The net value of equipment credited toward the purchase or lease of another piece of equipment.