assuming you have met the use and wear standards, the residual value is considered unreasonable if it exceeds the realized value by more than three times the base monthly payment (sometimes called the “three-payment rule”).

 

Overdraft Checking—A line of credit that allows you to write checks or draw funds with an EFT card for more than your actual balance, with an interest charge on the overdraft.

 

Points and Origination Fees—Fees paid to the lender for the loan. One point equals 1 percent of the loan amount. Points are usually paid in cash at closing. In some cases, the money needed to pay points can be borrowed, but doing so will increase the loan amount and the total costs. An origination fee covers the lender's work in preparing your mortgage loan.

 

Realized Value—(1) The price the lessor or assignee receives for the leased item at disposition, (2) the highest offer for the leased item at disposition, or (3) the fair market value of the leased item at termination. The realized value may be either the wholesale or the retail value as specified in the lease agreement.

 

Rescission—The cancellation of a contract.

 

Residual Value—The end-of-term value of the item established at the beginning of the lease and used in calculating your base monthly payment. The residual value is deducted from the adjusted capitalized cost to determine the depreciation and any amortized amounts. It is an estimate that may be determined in part by using residual value guidebooks. The residual value may be higher or lower than the realized value at the scheduled end of the lease.

 

Security—Property pledged to the creditor in case of a default on a loan; see collateral.

 

Security Interest—The creditor's right to take property or a portion of property offered as security.

 

Service Charge—A component of some finance charges, such as the fee for triggering an overdraft checking account into use.

 

Transaction fees and other charges—Most creditors charge a fee if you don’t make a payment on time. Other common credit card fees include those for cash advances and going beyond your credit limit. Some credit cards charge a flat fee every month, whether you use your card or not.