Extended warranty Also known as service contract. A contract that covers certain car repairs or problems after the manufacturer's or dealer's warranty expires. Extended warranties are sold by car manufacturers, dealers and independent companies. With a new car, the extended warranty usually must be purchased by the end of the first year of ownership. The amount that a willing buyer would pay at a certain point in time for the vehicle in an arms-length transaction .
Finance lease See open-end lease .
A type of insurance offered to auto lease customers. It pays the difference between what you own and what the vehicle is worth in the event the car is stolen or destroyed. Holdback See dealer holdback . In auto terms, a contract in which one party agrees to pay for another party's financial loss resulting from a collision, theft, or other damage. Leases and loans generally require consumers to maintain a certain level of insurance.