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Insured: The individual or organization covered
by an insurance policy.
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Liability: The legal responsibility for injury
done by the insured to a Third Party, or damage done to their property.
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Third Party: The third part is the individual
who is injured or whose property is damaged by the insured. The first party is insured.
The second party is insurer.
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Lessor: A person, business or organization that
leases the vehicle to Lessees.
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Lessee: A person, business or organization entitled
to possession and use of the vehicle according to the terms of the lease.
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Term: The length of time which a lease or a loan
contract is active.
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Mileage Limitation: The number of
miles the Lessee is allowed to use on the vehicle during the term.
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Capitalized Cost Reduction:
Money paid by the Lessee to lower the Cap Cost, much like a down payment on a loan
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Residual: The value of the vehicle at the
end of the term as estimated by the Lessor, often expressed as a percentage of MSRP;
this is a function of the vehicle itself, the term, and the mileage allowance
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Money Factor: The interest charged during
the term of the lease, usually expressed as a five-digit decimal value which is
the interest rate divided by 2,400 (more on this later)(sometimes called rent charge)
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Depreciation: The decrease of a vehicle's
value caused by age, mileage and condition.
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Gap Insurance: An auto insurance pays
the difference between a vehicle actual cash value that paid by conventional insurance
and the amount that the consumer owes the leasing or finance company when the vehicle
is stolen or destroyed.
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Wear and Tear: The physical and inevitable
damage of a vehicle due to normal use.
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Equity: The difference between a vehicle fair
market value and the debt that owes against it.
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Credit Rating: An evaluation of an individual
or corporation's present financial condition and past credit history.
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Annual Percentage Rate: An interest
rate reflected as a yearly rate, it is calculated by taking into account all fees
and costs paid to acquire a loan. It is usually higher than the stated note rate.
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Premium: The amount of money paid for insurance.
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Policyholder: The Person or organization
who owns an insurance policy and pays the premium.
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Insurer: The insurance company or other organization
that issues an insurance policy to a policyholder and provides insurance coverage.
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