Auto Loan Learn the Terms

Car Talk
Below are some terms you may hear when shopping for a new or used vehicle or auto loan. Some words may have more than one meaning. Only those meanings relating to this site will be used.

L

Lease
A contract agreement between the lessee (you) and the lessor (the leasing company) for temporary use of a vehicle, property, an apartment, machinery, or personal property, etcetera, subject to stated terms and limitations, for an agreed period of time and for a specified payment.

In the case of a vehicle, the lessee (you) pays to the leasing company monthly payments without actually buying the vehicle. The company leasing the vehicle continues to own the vehicle. The vehicle is returned to the leasing company when the lease expires unless the lessee (you) decides to buy the vehicle, if the contract allows for that option.

In the case of a rental agreement between a property owner and a tenant, the tenant (you) signs a contract for use of the property for an agreed period of time and a specified payment of rent. Example: The tenant (you) signs a contract to lease an apartment from a landlord (owner of the apartment) for 12 months at 850 dollars a month.

Lease Purchase
An option for the buyer (you) to lease with an option to buy.

Lemon Law
State laws that provide remedies to consumers for vehicles that repeatedly fail to meet certain standards of quality and performance. Lemon laws vary by state and may not cover leased vehicles.

Lender
The lender may be a bank, finance company, credit union or other financial institution or a government agency that provides loan funds to the borrower (you).

Lessee
The person who signs a lease (you).

Lessor
The leasing company or lender or individual who leases property to another, such as a car dealer, business, manufacturer, financial institution or landlord.

Liabilities
Your debts and other monetary obligations.

List Price
List price is another name for manufacturer's suggested retail price (MSRP). Also called sticker price. This is the sticker you see attached to a new vehicle's window.

Loan Origination Fees
Fees charged by the lender for processing the loan and are often expressed as a percentage of the loan amount.

Loan Principal
The total sum of the amount of money borrowed or the amount of the loan that has not yet been paid back to the lender.

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