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Jun 10, 2004 21:49:47 |
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Description:
Acquisition Fee - Covers administrative costs and is included in most lease transactions.
Adjusted Capitalized Cost - Capitalized cost minus the capitalized cost reduction.
Amortized Amounts - Part of base monthly payment, includes taxes, fees, insurance payments, prior credit or lease balances and insurance payments.
Assignment - Sale of a lease agreement to an assignee, a third party that assumes all or most of the responsibilities of the assignor (lessor).
- B -
Base Monthly Payment - Lease charges, monthly estimated depreciation and amortized amounts divided by the number of months in the lease.
- C -
Capitalized Cost - Value of the vehicle plus amortized amounts, paid over the course of the lease. Also called gross capitalized cost.
Capitalized Cost Reduction - Any down payment, net trade-in allowance or rebate that reduces the gross capitalized cost, resulting in an adjusted capitalized cost.
Closed-End Lease - Most common type of consumer lease. Lessee is responsible for satisfactorily maintaining the vehicle during the lease term. Lessee may exercise a purchase option if it is written in the agreement. Also called a Walk-Away Lease or a Non-Participating Lease.
Consumer Leasing Act - Amended effective Jan. 1, 1998, states that lessors must provide uniform cost and disclosures about consumer lease transactions. Implemented by Regulation M.
- D -
Dealer Preparation Fee - Covers expenses associated with preparing a vehicle for lease. Default - Failure of lessee to meet conditions of lease that can result in lease termination.
Disclosures - Information required in writing by federal regulation and state laws that pertains to financial and other terms and conditions of a lease.
Disposal Fee - Charged by the leasing company to cover the cost of moving, cleaning and disposing of the car at the end of the lease. Should be waived if the purchase option is exercised.
Documentation Fee - Covers the cost of preparing lease documents.
- E -
Early Termination - Ending the lease before scheduled termination date, usually resulting in a substantial Early Termination Charge or Early Termination Payoff amount as defined in your lease agreement.
Estimated Depreciation - Estimated decline in vehicle's value over the span of the lease. In part, what your monthly payments are based upon. It is the difference between the capitalized cost and the vehicle's residual value.
Excess Mileage Charge - Assessed for mileage in excess of the maximum specified in the lease agreement.
Excess Wear And Use Charge - Varies according to the signed agreement. Ask for the standards for wear and use to be defined clearly in writing before signing the lease.
- F -
Fees and Taxes - An estimated total amount you will pay for taxes, licenses, registration, title and official fees.
Flexibility On Moving - A requirement to pay off the lease if lessee moves to a state where the lessor or assignee does not do business. Lessee might have to pay sales tax to the state moved into.
- G -
Guaranteed Auto Protection (GAP) - Protection if the vehicle is totaled or stolen. Lessee may be responsible for an insurance deductible and any outstanding amounts owed. If GAP is not mentioned in the lease, ask for it to be included.
- I -
Inception Fees - Includes first payment, refundable security deposit, DMV fees and an acquisition fee.
Insurance - Compensation provided by the insurer to the insured for specified events. Comprehensive, collision and liability insurance are generally required while leasing to cover financial loss in the event of an accident.
- L -
Late Charge - Penalty for late payment.
Late Payment - Payment received after due date.
Lease - Contract between lessor and lessee for the use of a vehicle for a specified amount of time and amount.
Lease Rate - A percentage used to describe the rent charge, an amount charged in addition to depreciation and any amortized amounts.
Lease Term - Length of lease agreement.
Lessee - Party who leases vehicle. Holds temporary possession of the vehicle.
Lessor - Owner of the vehicle. Holds title of vehicle.
Luxury Car Tax - Federal tax on vehicles valued at a set amount or weight. Collected by the lessor and remitted to the IRS.
- M -
Manufacturer's Suggested Retail Price (MSRP) - Sticker price.
Mileage Allowance - Mileage limit for lease term.
Monthly Sales/Use Tax - State and local taxes that lessee pays as part of the total monthly payment.
- O -
Open-End Lease - Agreement in which the amount owed at end of lease is based on the difference between the residual value of the leased property and its realized value. Also called a Finance Lease or a Participating Lease.
- P -
Purchase Option - Some lease agreements have an option to purchase the leased vehicle at the end of the lease term. It may be a fixed dollar amount or the Fair Market Value.
- R -
Realized Value - Value assigned to vehicle upon disposition. Specified in the lease agreement, it may be either the wholesale or the retail value.
Registration Fee - Charge for registering a vehicle in state and the use of its roads.
Residual Value - Done at the inception of the lease, it is a forecast of what the vehicle's value will be at the end of the lease term. May vary from the realized value.
- S -
Sales/Use Tax - Varies according to state mandates. Discuss this with your local dealer.
Security Deposit - Paid upfront by the lessee to help ensure lessee compliance with the terms of the agreement.
Sublease - Transferring of lease rights to a different party. Usually prohibited and a breach of contract. Check with your lessor or assignee before entering into a sublease.
- T -
Title - Held by the lessor or assignee, it identifies the owner of the vehicle.
Total Contractual Obligation - Total of capitalized cost reduction, base monthly payments and associated charges due.
Total Monthly Payment - Base monthly payment plus any monthly taxes or other charges.
Trade-in Value - Value of your vehicle credited toward the purchase or lease of a different vehicle. |
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