The Monroney sticker price plus a suggested markup for dealer-installed options. The annual reduction in the value of an asset attributed to normal wear and tear. Depreciation is based primarily on miles driven. The greater the miles, the greater the depreciation. Annual depreciation rates for autos are also influenced by vehicle model, maintenance, general consumer demand for the model, and the maker's reputation for quality.
Luxury cars retain their value longer and, hence, depeciate more slowly.
Depreciation expense is used to calculate the residual value for preparing closed-end leases . Down payment Amount paid by the consumer in cash or trade-in value in order to obtain an auto loan to finance the remainder of the purchase price. Escrow A process handled by an third-party, fiduciary agent that involves depositing and disbursing funds for buyer and seller in a neutral account. The escrow agent's role is to protect either side of a transaction from the other side's unauthorized use of funds and to ensure an arms-length transaction between buyer and seller. Gap protection Insurance that covers the amount owed due to early termination of a lease agreement.