What is 'Absolute Interest'

Absolute interest means having full ownership or the total and complete rights to an asset. Absolute interest can be held on assets such as real estate, jewelry or vehicles, to name a few. It indicates that the owner's interest is not diluted by or subject to another party's ownership, nor is it dependent on conditions that must be fulfilled. An individual with an absolute interest has both legal and beneficial possession of an asset or property, meaning that person has the sole right to legally possess the asset and receive benefits from it.

BREAKING DOWN 'Absolute Interest'

Absolute interest is similar to vested interest. Vested interest refers to the complete right to benefit from the property in question at some point in the future, while absolute interest refers to complete rights in the present. Absolute interest is the opposite of a contingent interest. Contingent interest confers an ownership interest only upon the fulfillment of certain conditions or the occurrence of specific circumstances.

An absolute interest in an asset or property gives the owner full entitlement to the benefits and privileges that accrue from such ownership. An example of an absolute interest would be the direct ownership of a vehicle. A buyer's purchase of a vehicle by transferring his or her own assets or money to the seller in exchange for the vehicle, without the use of credit from a lender, results in an absolute interest in the vehicle for the buyer. The buyer is not bound by a lender to pay off a loan, meaning there are no other parties with an interest in the vehicle. With an absolute interest in the vehicle, the buyer is free to do what he or she would like with it, including driving it, renting it or even destroying it.

RELATED TERMS
  1. Absolute Return

    Absolute return is the percent that an asset rises or declines ...
  2. Absolute Percentage Growth

    Absolute percentage growth is an increase in the value of an ...
  3. Absolute Title

    An absolute title is a title to a property that is free of any ...
  4. Absolute Beneficiary

    An absolute beneficiary is a designated beneficiary that can ...
  5. Absolute Return Index

    The absolute return index is used to compare the absolute returns ...
  6. Absolute Physical Life

    The length of time that it takes for an asset takes to become ...
Related Articles
  1. Investing

    5 Common Methods of Holding Titles on Real Property

    Understand the common methods of holding title to real estate property so you can decide which method best meets your needs.
  2. Investing

    Contingency Clauses In Home Purchase Contracts

    Here, we introduce widely used contingency clauses in home purchase contracts and how they can benefit both Buyers and Sellers.
  3. Personal Finance

    Simple Interest Loans: Do They Exist?

    Yes, they do. Here is what they are – and how to use them to your advantage.
  4. Personal Finance

    How Vesting Works and Why It's Important

    Vesting is an important part of your company's retirement or pension plan. Understand how and when you are fully vested at work.
  5. Financial Advisor

    Worst European Hedge Funds In 2016

    Paris Cafe: In another tough year for European hedge funds, only a few firms came out on top
  6. Taxes

    How Does a Tax-Free Exchange Work?

    In regards to the sale of property, particularly in real estate, a 1031 exchange is increasingly being recognized for its tax benefits to investors of all levels.
  7. Insurance

    How to Avoid Taxation on Life Insurance Proceeds

    Decrease the value of your taxable estate and prevent the tax man from getting you one last time.
  8. Investing

    What You Should Know About Real Estate Valuation

    Accurate real estate valuation is important to mortgage lenders, investors, insurers, and buyers and sellers of real property.
  9. Investing

    How to Make Money With Real Estate Options

    Buying real estate options is one way to invest in real estate at a lower entry cost.
RELATED FAQS
  1. What are some real life examples of absolute advantage?

    Learn about absolute advantage, comparative advantage and their impact on trade through a real-world example involving call ... Read Answer >>
  2. What's the difference between absolute and relative return?

    Knowing whether a fund manager or broker is doing a good job can be a challenge for some investors. It's difficult to define ... Read Answer >>
  3. The key difference between real estate and real property

    Understand how real estate is legally different from real property and the implications of that difference for each property ... Read Answer >>
Hot Definitions
  1. Current Assets

    Current assets is a balance sheet account that represents the value of all assets that can reasonably expected to be converted ...
  2. Volatility

    Volatility measures how much the price of a security, derivative, or index fluctuates.
  3. Money Market

    The money market is a segment of the financial market in which financial instruments with high liquidity and very short maturities ...
  4. Cost of Debt

    Cost of debt is the effective rate that a company pays on its current debt as part of its capital structure.
  5. Depreciation

    Depreciation is an accounting method of allocating the cost of a tangible asset over its useful life and is used to account ...
  6. Ratio Analysis

    A ratio analysis is a quantitative analysis of information contained in a company’s financial statements.
Trading Center