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Canadian Financial, Real Estate and Mortgage Glossary
How often this word is used
50% - Moderately
50% - Moderately
|Synonyms:||abatement, discount, mail-in rebate, mail-in refund, refund|
|Filed Under:||automotive, financial-banking|
Definition of rebate
- 1. A manufacturer's reduction on the price of a vehicle as an incentive for potential buyers to make a purchase. Rebates often appeal to buyers with no credit or less-than-perfect credit who do not qualify for the lowest-rate loan. A rebate may also appeal to first-time buyers who don't have much of a down payment or a trade in.
Related Terms and Acronyms:
- capitalized cost A leasing term that refers to the price of the car. The lower the capitalized cost, the lower the monthly lease payment. The cap cost is negotiable and can be reduced by a cash down payment, trade-in or a manufacturer's rebate; it can be increased by the loan acquisition fee or costs left over from a previous lease.
- closed-end lease The most common type of car lease. The lessee may return the car at the end of the lease term, pay any end-of-lease costs, such as the disposition fee, and the lease agreement is over. In a closed-end lease, the lender assumes the risk of predicting the value of the vehicle (its residual value) at the end of the lease's term. Closed-end lease payments are somewhat higher than open-end lease payments.
- lease (lse) A written agreement in which the property owner allows a tenant to use property in exchange for rent, and for a specified period. Or, a written agreement in which a car dealer allows a consumer to use a vehicle in exchange for payments for a specified period.
- loan Letting another party use something of value temporarily.
- money factor A leasing term that expresses the cost of borrowing. It is similar to the interest rate paid on a conventional car loan, but it is expressed as a difficult-to-understand fraction. To convert the money factor to a recognizable interest rate, multiply it by 24. For example, a money factor of .00345 x 24 = 9 percent interest. The money factor is negotiable, and consumers who lease a new car should look for a money factor close to the current interest rate charged for new-car loans.
- offer To propose or give something.
- open-end lease Sometimes called a finance lease. It usually offers lower payments, but carries a risk for the consumer. Under an open-end lease, the lessee must pay any difference between the residual value of the car as stated in the lease and the fair market value of the car, if lower, at the end of the lease. The lessor pays for the appraisal that sets the value. If the consumer doesn't agree with it, the consumer may pay for a binding, independent appraisal by someone agreed to by both parties.
- purchase price The total selling price of the home, including the cash down payment and the principal on the loan.
- refund To give back, return, or repay.
- sticker price (MSRP, RRP) This shows the base price, the manufacturer's installed options with the manufacturer's suggested retail price (MSRP), the manufacturer's destination charge and the fuel economy (mileage). It is the Monroney label affixed to the car window and is required by federal law. The label may not be removed by anyone other than the purchaser.
More Related Terms and Acronyms
- rebate card — Definition
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