To many, auto leasing seems to have a vocabulary terms of its own. Understanding leasing terms can help you decipher some leasing jargon. Here are a list of some key leasing terms and and their definitions.
Auto Lease Acquisition Fee – A lender charge associated with auto leasing. Charged by the bank to assess the lease. Typically used to cover administrative fees.
Auto Lease – A method of financing a car. Rather than an auto purchase, you essentially rent a car for a predetermined period of time. At the end of the car lease, depending on your car lease agreement, you can return or purchase your car.
Auto Lease Agreement – The contract that defines the terms and conditions of a car lease.
Auto Loans – A loan to pay for the purchase of a new or used vehicle.
Auto Lease Balloon Payment – The residual portion of lease/finance agreement due at lease or loan maturity. Most banks and leasing originations will offer refinancing of balloon payment if desired.
Auto Lease Base Monthly Payment – The portion of your monthly car payments that goes to depreciation over the life time your auto lease. It is calculated as (Net Capitalized Cost Residual) / (the number of months in a vehicle lease).
Auto Lease Best Car Lease Deal – A lease where the auto lease company offers a special deal on a car lease. For example, where the car sale price is discounted, the car lease company offers a vehicle rebate, or the loan interest rate is low. Often best car lease deals are offered for cars that have a low depreciation, such as Honda, Mercedes or Lexus.
Auto Lease Blue Book Value – The wholesale price that an auto dealer pays to buy a used car, which is published by Kelley Blue Book.
Auto Lease Body Type – The distinguishing characteristics of a car, such as the number of doors, windows, way it carries cargo (hatchback, sedan, fastback, sport, etc.)
Auto Lease Broker – A professional that represents a buyer and/or seller and assists in negotiating the contract.
Auto Lease Business Lease – A car lease of one of more vehicles for commercial purposes.
Auto Lease Buy Lease – A type of comparison that calculates monthly car lease and auto loan payments, as well as total lease costs versus the total costs for purchasing a car.
Auto Lease Buy Leased Car – Either the buyout of a car at the end of your lease, or buying a car that was previously leased by someone else.
Auto Lease Buyer’s Market – An economic market where conditions are in favor of the buyer.
Auto Lease Capitalized Cost – The total selling price of a leased vehicle including, tax, title, license, state and dealer fees and negative equity after equity or money down reductions. Associated with auto leasing.
Auto Lease Capitalized Cost Reduction – The amount of money you put down on an auto lease, including cash and trade equity.
Auto Lease Car Buying Services – State licensed organizations who facilitate the acquisition of a new or used vehicle at a lower price.
Auto Lease Car Lease – See auto lease.
Auto Lease Car Lease Assumption – When you end a car lease before the term is over and have someone else take over your lease.
Auto Lease Car Lease Deal – The special offers made by a leasing company to promote car leases. For example, where the sale price is discounted, the car lease company offers a rebate, or the interest rate is low.
Auto Lease Car Lease Refinance – Termination a vehicle lease to begin a new lease for the same vehicle. Usually done to lower payment.
Auto Lease Car Lease Swap – The transfer of an auto lease to another party, such as a leasing company, before the lease is finished.
Auto Lease Car Lease Termination – When you end a car lease before the lease contract date.
Auto Lease Car Lease Trade – Trading a car that is still under lease, but whose term hasn’t been reached, for another leased car.
Auto Lease Closed End Lease – Type of lease that affords you the options to either buy the vehicle at lease maturity, or you return it with no further obligation.
Auto Lease Dealer Holdback – A factory to dealer monetary disbursement that usually takes place at the end of the fiscal year. Most dealers do not consider this profit since specific volume goals may affect payout.
Auto Lease Depreciation – The amount a vehicle decreases in value over time, based on mileage, market conditions, wear and tear and other factors.
Auto Lease Disposition Fee – A car leasing company fee charged at the end of an auto lease to refurbish a car for resale.
Auto Lease Due at Signing – The amount of money you need to pay to a car leasing company when an auto lease is signed.
Auto Lease Early Termination Fee – A fee charged by car leasing companies for ending your car lease before the end of the predefined lease term.
Auto Lease Excess Mileage – The number of miles driven in excess of a specific number defined in your car lease.
Auto Lease Excess Wear & Tear – A level of physical wear on a car in excess of a level defined in your car lease.
Auto Lease Financing – A way to raise funds or capital for buying a new car, getting a mortgage on a house, or making purchases on a credit card.
Auto Lease Fixed Expenses – Expenses that are paid each month and that remain the same, such as mortgage, school tuition, car insurance, etc.
Auto Lease Capitalized Cost – The total selling price of a leased vehicle including, tax, title, license, state and dealer fees and negative equity before equity or money down reductions. Associated with auto leasing.
Auto Lease Guaranteed Loan – When a lender offers a loan with the understanding that the loan is guaranteed to be repaid by another party if the borrower defaults.
Auto Lease Household Income – The total income made by all individuals in a household. This includes: salaries, bonuses, child support, social security, unemployment, etc.
Auto Lease Lease Inception Cash – The total amount of money you need to pay when starting a car lease. This includes first month’s payment, any tax and title fees, your down payment (e.g., capitalized cost reduction), and security deposit.
Auto Lease Lease Luxury Car – Where you lease a high-end and more expensive vehicle, which has a lower depreciation, rather than buying a car outright.
Auto Lease Lease Residuals – The value of the car at the end of the lease based on MSRP.
Auto Lease Line – The manufacturer name for a family of cars with certain features in common, such as body type, cab type, chassis, etc.
Auto Lease Make – A vehicle’s manufacturer name.
Auto Lease Model – The manufacturer name for a group of cars of the same body type, make, line, and series.
Auto Lease Model Year – The year that a specific model of car was released by a manufacturer. Note: This can cover a two-year period.
Auto Lease MSRP – Manufacturer’s Suggested Retail Price for an auto. This is also called “sticker price.”
Auto Lease OEM – Original Equipment Manufacturer. Can be associated with pretty much anything on a vehicle, or the vehicle itself.
Auto Lease Purchase Agreement – A contract signed by the buyer and seller that indicates the conditions under which an item or property will be sold.
Auto Lease Purchase Contract – An agreement between the buyer and seller that indicate the prices and terms of the sale of the property or item.
Auto Lease Purchase Option Fee – The fee charged if the person leasing a car decides to buy the vehicle at the end of the car lease.
Auto Lease Purchase Option Price – The selling price of your car if you buy it at the end of a car lease.
Auto Lease Qualifying Ratio – The ratio of fixed monthly expenses to monthly income. This ratio is used by lenders to determine how much to loan to a homebuyer.
Auto Lease Refinancing – Paying of one loan with the proceeds from a separate loan that is secured by the same property.
Auto Lease Residual Value – The amount your car leasing company estimates your car will be worth at the end of your car lease, generally defined as a percentage of MSRP.
Auto Lease Security Deposit – A payment made prior to entering an auto lease that is, usually, equal to one month’s payment as security against excess wear and tear on your car.
Auto Lease Seller’s Market – An economic market where conditions are in favor of the seller.
Auto Lease Series – The manufacturer name for a subtype of car model, which indicates price, size and specific features.
Auto Lease Term – The time period for which a loan must be repaid.
Auto Lease Trade-in value – The value that a car dealership will give you for your existing car as a deposit on a new car.
Auto Lease Upside down car loan – Where the amount of a car loan is more than the value of a vehicle.
Auto Lease VIN number – A unique descriptive number for each vehicle made. Also called the Vehicle
Identification Number. Assigned by the Original Manufacturer to identify it from any other and contains information about the vehicle such as year built, features and location of production.
Auto Lease Wear and tear – The normal damage done to a vehicle over its lifetime.
