Leasing Basics
Lessor
The person or financial institution funding the lease
Gross Capitalized Cost
The agreed-upon value of the vehicle at the beginning of the lease including allowable options and applicable freight, taxes, and fees.
Acquisition Fee
A charge the lessee pays that covers administrative costs.
Lessee
The person leasing the vehicle.
Residual Value
Estimated value of a vehicle at the end of the lease.
Security Deposit
A cash deposit required at the beginning of a lease that is held by the lessor until the lease ends.
Advance
Amount paid to the dealer at the beginning of the lease by the lessor.
Money Factor
This is used to determine how much the customer will pay in finance charges.
Early Termination Fee
Fee charged to customers when a vehicle is returned at lease maturity.
Depreciation
Dollar amount that a vehicle is expected to decline in value over the lease term.
Capitalized Cost Reduction
Lowers the gross capitalized cost using a down payment, trade-in value, factory-to-dealer incentives, and/or captive financing incentives.
Excess Wear and Use Fees
Charges that are applied at lease turn-in if the vehicle’s condition not meet certain minimum criteria.
Adjusted Capitalized Cost
Gross capitalized cost less any capitalized cost reduction.
Disposition Fee
Fee charged to customers when a vehicle is returned at lease maturity.