Acquisition Fee: This is the charge for processing a lease. All lenders charge some type of fee, but this is usually figured into the overall cost. We will make you aware of all the charges and what they are up front.

Cap Cost Reduction: This is the money you put down (as in a loan) to lower your payment. When you initially pay a larger sum, the monthly payments will be lower. A smaller cap cost reduction means a higher monthly payment. The value of your trade-in (if any) can be applied as part of this amount. This is something you will generally see in advertising promotions to highlight a lower payment. We usually do NOT recommend you do this.

Closed-End Lease: A lease that initially fixes the vehicle’s residual value and is stated in the contract. Most vehicle leases are closed-end, which means you won’t owe an additional sum at the end of the term if the car turns out to be worth less than anticipated. Unless the mileage and/or wear and tear provisions are exceeded.

Dealer Participation: An amount the dealer contributes to lower the total price of the vehicle which is their incentive to get your business. Any dealer contribution is applied to the cap cost reduction.

Depreciation: The amount by which a vehicle loses its value over a specified period of time (the difference between its original price and its residual value).

Disposition Fee: An amount to be paid at the end of the lease term used to cover costs of preparing the returned vehicle for sale. 

Early Termination Fee: A penalty assessed if you choose to end the contract earlier. Leasing companies justify this because depreciation is highest in the early portion of a vehicle’s life, so a prematurely terminated lease cuts heavily into their earnings. The penalty is likely to be hefty.

End-of-Lease Purchase Price: (Residual) This is an agreed-upon price you will pay when the lease is up if you choose to keep the vehicle.

Excess Mileage Charge: A per-mile amount charged if you drive the vehicle more than the stated maximum (typically 12,000 to 15,000 miles per year). A typical charge is about $.15 to $.30 per additional mile, but could be higher. If you expect to drive farther than the contract allows, you can usually negotiate a lower figure for the excess miles.

Excess Wear-and-Tear: If the vehicle is returned in good condition, there should be no extra charge. A certain amount of wear-and-tear is permitted, but significant body damage or evidence of improper maintenance will generate additional sums to be paid for necessary repairs.

Gap Insurance: In most cases, your regular auto insurance covers the leased vehicle. However, if the vehicle is totally wrecked, it could be worth less than an insurer will pay. Gap insurance covers the difference between the cash value of the vehicle and what you still owe on the lease contract. Some leases include this in the contract and can be obtained through us.

Lease Term: A period of months during which you have use of the vehicle and will pay an agreed-upon monthly payment. Lease terms of 24 or 36 months are most common, but other terms including 12 / 39 / 42 / 48 / 60, etc. contracts can be obtained. We’ll work with what makes you comfortable.

Lessee: The person who leases a vehicle from a dealer or other organization.

Lessor: The dealer or other organization that leases a vehicle to a customer.

Monthly Payment: Amount that you are required to pay to the lessor or its agent every month, through the lease term.

Purchase Option: The right to buy the vehicle you’ve leased, at the end of the lease term, for a stated price.

Residual Value: Residual value is one of the constituents of a leasing operation. It describes the future value of a good in terms of percentage of depreciation of its initial value.

Security Deposit: A deposit, usually refundable, required before the lease contract takes effect.