What does the term “retail installment contract” refer to?

The term “retail installment contract” specifically refers to a financing agreement between the dealer and the buyer for the purchase of a vehicle. This type of contract outlines the terms under which a buyer will pay the dealership for the vehicle over a specified period, typically including the financing amount, interest rate, and payment schedule.

Such agreements allow buyers to acquire vehicles without needing to pay the full purchase price upfront. Instead, they can make monthly payments, which can make car ownership more accessible. The retail installment contract also usually secures the lender's interest in the vehicle until it is fully paid off.

In contrast, a lease agreement pertains to renting a vehicle, a warranty agreement relates to repair coverage, and a trade-in agreement involves the exchange of an old vehicle as part of the payment for a new one. Each of these alternatives serves a different purpose and does not encompass the primary financing dynamics characteristic of a retail installment contract.