Rental Basics
What are three common types of rental fees?
Mileage, fuel, insurance
What is a lease residual value?
The estimated value of the vehicle at the end of the lease term.
What is one advantage of leasing over financing?
Lower monthly payments.
What is the biggest difference between leasing and renting?
Leasing is long-term; renting is short-term.
What law regulates consumer leases under $71,000?
Consumer Leasing Act.
What are the main types of rental car companies?
Corporate, franchise, independent
What happens if you exceed the mileage limit on a lease?
You must pay excess mileage fees per mile over the agreed limit.
What is one disadvantage of financing over leasing?
Higher monthly payments; full depreciation cost.
Which option typically includes maintenance—rental, lease, or financing?
Leasing often includes maintenance, while financing and rental do not.
What must be disclosed in a lease agreement?
Monthly payment, lease term, fees, residual value, mileage limits, penalties.
What is the difference between unlimited mileage and specific mileage rentals?
Unlimited allows unlimited driving; specific mileage includes extra fees for exceeding the limit.
What are two differences between leasing and financing?
Leasing: lower payments, no ownership; Financing: higher payments, ownership.
What fees are typically due at lease signing?
(Acquisition fee, security deposit, first payment, title, registration.
What type of vehicle payment structure best suits someone who keeps a car for 10+ years?
Financing.
What is a disposition fee in leasing?
A fee paid at lease-end to cover the cost of reconditioning the vehicle for resale.
What is “deadhead” in car rentals?
A one-way rental fee charged to return the vehicle to its original location.
What is the purpose of a capitalized cost reduction?
A down payment or trade-in that lowers monthly lease payments.
What happens at the end of a lease?
You can return the car, buy it, or lease a new one.
How does asset utilization apply to rental car companies?
They maximize profit by renting the same vehicle multiple times before selling it.
What are a lessee’s responsibilities at the end of a lease?
Return the car, pay excess fees, or purchase the car.
Name two major trends impacting the rental industry today.
Car sharing, ride-sourcing, peer-to-peer rentals, corporate fleet solutions, etc.
How does a lease gap insurance policy protect the lessee?
It covers the difference between the insurance payout and the remaining lease balance in case of a total loss.
Why might a business choose leasing over financing for fleet vehicles?
Tax benefits, lower maintenance costs, easy turnover of new vehicles.
Why do rental companies sell their cars after a few years?
To maintain a newer fleet, reduce maintenance costs, and maximize resale value.
What federal agency regulates advertising for leasing?
The Federal Trade Commission [FTC].