1. Vocabulary - Making major purchase decisions

What Does It Mean?

Match the terms relating to the basic terminology and concepts associated with making automobile and housing decisions with the descriptions of the terms on the right. Read each description carefully and type the letter of the description in the Answer column next to the correct term.

These are not necessarily complete definitions, but there is only one possible answer for each term.

Term	Answer		Description
Rebate	D	A.	This is the price of an asset being leased as specified in the lease agreement, which includes the negotiated cost of the vehicle and any applicable fees and taxes.
Purchase option	G	B.	This is a contract and business transaction in which the user of an item, such as a car or house, receives the right to use it in exchange for scheduled payments for a fixed period of time.
Lease	B	C.	This type of lease arrangement is often called a walk-away lease, because it allows the lessee to merely return the vehicle provided that the preset mileage limit has not been exceeded and the vehicle hasn’t been abused.
Depreciation	J	D.	This is a partial refund offered to attract the buyer to purchase the vehicle.
Closed-end lease	C	E.	This refers to the practice of unethical car dealers quoting a low sales price on a vehicle to induce a potential customer to make an offer and then attempting to add costly add-ons to the transaction prior to the signing of the contract.
Sticker price	H	F.	This agreement, which is used to purchase a car, details the offering price and all conditions of the offer; when the buyer and seller sign it, it establishes the terms of the legally binding transaction.
Residual value	I	G.	This is the price at which a lessee can purchase his or her leased car or other asset of the end of the lease period.
Low-balling	E	H.	This is the advertised retail price listed on a particular vehicle for sale.
Capitalized cost	A	I.	This is the worth of the leased asset after the lease period expires.
Sales contract	F	J.	This phenomenon, which represents the loss in the value of an asset that occurs during the period of its ownership, is calculated as the difference between the asset’s purchase price and its subsequent sale price.