Home Loan

There are two primary methods of borrowing money to buy a Home: direct and indirect. A direct loan is one that the borrower arranges with a lender directly. Indirect financing is arranged by the Home dealership where the Home is purchased. Legally, an indirect “loan” is not technically a loan; when a Home buyer obtains financing facilitated by a dealership, the buyer and dealer sign a Retail Installment Sales Contract rather than a loan agreement. The dealer then typically sells or assigns that contract to a bank, credit union, or other financial institution. Usually, the dealer knows in advance which financial institution will buy the contract. The borrower then pays off the financial institution the same as for a direct loan

Typically, the indirect auto lender will set an interest rate, known as the "buy rate". The auto dealer then adds a markup to that rate, and presents the result to the customer as the "contract rate".[citation needed] These markups have been the focus of some regulatory scrutiny because they can cause variations in interest rates that are not correlated with credit risk

Home leases

A lease is a contractual agreement between a person who owns the property (lessor) and a person who gets to use it during the term of the lease (lessee). Usually, Home leases allow the lessee to drive the Home for a certain number of miles for a certain number of years. The lessee pays a fixed monthly payment for the privilege of driving the vehicle, and when the lease ends, the lessee returns the vehicle to the lessor. The lessee pays only for the value of the vehicle for the term of the lease. Lenders calculate lease payments based on the vehicle’s residual value, or what they estimate the Home will be worth when the lease is over