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Your Location: Home - Auto Loan Auto Loan Information CenterCar and Auto Terminology Dictionary
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Operating lease
A short term cancellable lease agreement which is not fully amortised. It is a lease, other than a finance lease wherein the lessor seeks to recover his investment in a lease by leasing the equipment to more than one lessee. For financial accounting purposes, an operating lease is a lease which does not meet the criteria for a capital lease or direct financing lease. Also, used generally to describe a short-term lease whereby a user can acquire use of an asset for a fraction of the useful life of the asset. The lessor may provide services in connection with the lease such as maintenance, insurance and payment of taxes.
PDC(post dated cheque)
Most financiers collect post dated cheques towards the repayment of the lease rentals or the installments (EMI's) for a lease / hire-purchase / loan contract.
The post dated cheques not only provide convinience, but also protect the financiers by making the issuer of the cheques liable to honour them as per the Negotiable Instruments Act .
Promissory Note
As a matter of precaution, the lessee/hirer/borrower is required to execute an unconditional promissory note in favour of the financier, for full amount of the installments / rentals payable under theagreement. The promissory note is counter guaranteed by the guarantor where applicable.
Residual Value
The market value of equipment prevailing at the end of the lease term.
Revelutions per Minute (rpm)
The expression of engine speed derived from the number of crankshaft rotations measured over a 60-second period. Passenger vehicle engines generally produce peak horsepower at a speed range of approximately 5000 rpm.
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