In order to get a good leasing deal, you need to understand leasing jargon. Read through this leasing glossary to get an overview of the basics:
Acquisition fee: A fee charged by a leasing company to begin a lease. Not all leasing companies charge an acquisition fee but if charge it starts at about $300 and is seldom negotiable.
Capitalised cost: The total selling price of the leased vehicle This also accounts for taxes, title, license fees, acquisition fee and any optional insurance and warranty items you elect to fold into the lease and pay overtime rather than upfront.
Depreciation fee: This is included in the monthly lease payment and is provided for any loss of value in the car. The depreciation fee is determined by getting the price of the vehicle, deducted by the anticipated residual value and divided by the number of months as negotiated in leasing it. For example, if the retail price of the vehicle is $23,500, the company will assume that the vehicle would be approximately 35% worth the original value which is $8,225. The difference would be $15,275 which would be divided by the lease number of months which is 36 months. Therefore the depreciation fee is $424.
Inception fees any fees that are due at the beginning of a lease. These typically include a security deposit, acquisition fee, first monthly payment, taxes and title fees.
Mileage allowance: This is the maximum miles traveled by the leased vehicle. Typically, companies require a maximum of 15,000 miles every year. However, some companies do accept negotiations.
Mileage charges: Charges caused by exceeding the mileage allowance are mileage charges. Companies usually charge ten to twenty cents every excess mile.
Money-factor A fractional number, such as 0.00043, used in calculating your monthly lease payments. You can get a rough estimate of the annual percentage rate on your lease by multiplying the money factor by 2,400. If a dealer quotes a money factor such as 3.4 than you can get the equivalent APR, 8.16, if you multiply by 2.4.
Residual value: The amount of the vehicle to be leased once the lease ends. Although individuals wanting to own the vehicle will be getting a higher lease-end cost, those residual values that are higher will have cheaper monthly payments.
Security deposit: For protection from non-payment issues, security deposits are needed. However, security deposits are returned at the end of the lease.
Disposition or termination fee: Termination fees are charged to the person when the lease ends and the person decides not to buy the vehicle.
Wear-and-tear charges Extra charges you have to pay at the end of your lease for any wear and use the leasing company considers above normal.
Acquisition fee: A fee charged by a leasing company to begin a lease. Not all leasing companies charge an acquisition fee but if charge it starts at about $300 and is seldom negotiable.
Capitalised cost: The total selling price of the leased vehicle This also accounts for taxes, title, license fees, acquisition fee and any optional insurance and warranty items you elect to fold into the lease and pay overtime rather than upfront.
Depreciation fee: This is included in the monthly lease payment and is provided for any loss of value in the car. The depreciation fee is determined by getting the price of the vehicle, deducted by the anticipated residual value and divided by the number of months as negotiated in leasing it. For example, if the retail price of the vehicle is $23,500, the company will assume that the vehicle would be approximately 35% worth the original value which is $8,225. The difference would be $15,275 which would be divided by the lease number of months which is 36 months. Therefore the depreciation fee is $424.
Inception fees any fees that are due at the beginning of a lease. These typically include a security deposit, acquisition fee, first monthly payment, taxes and title fees.
Mileage allowance: This is the maximum miles traveled by the leased vehicle. Typically, companies require a maximum of 15,000 miles every year. However, some companies do accept negotiations.
Mileage charges: Charges caused by exceeding the mileage allowance are mileage charges. Companies usually charge ten to twenty cents every excess mile.
Money-factor A fractional number, such as 0.00043, used in calculating your monthly lease payments. You can get a rough estimate of the annual percentage rate on your lease by multiplying the money factor by 2,400. If a dealer quotes a money factor such as 3.4 than you can get the equivalent APR, 8.16, if you multiply by 2.4.
Residual value: The amount of the vehicle to be leased once the lease ends. Although individuals wanting to own the vehicle will be getting a higher lease-end cost, those residual values that are higher will have cheaper monthly payments.
Security deposit: For protection from non-payment issues, security deposits are needed. However, security deposits are returned at the end of the lease.
Disposition or termination fee: Termination fees are charged to the person when the lease ends and the person decides not to buy the vehicle.
Wear-and-tear charges Extra charges you have to pay at the end of your lease for any wear and use the leasing company considers above normal.
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