Glossary
Acquisition Fee
A fee included in most lease transactions that typically covers administrative costs, such as the cost of obtaining a credit report and processing of lease documentation. Usually added to the total cost of the vehicle, although can also be paid up front.
Annual Percentage Rate (APR)
This is the percentage cost of credit on a yearly basis.
Base Monthly Payment
The portion of the monthly payment in a lease that includes depreciation, any amortized amounts, and vehicle usage costs. Taxes and any other fees are added to this base monthly payment to calculate the total monthly payment.
Billing Address
The mailing address to which you would like to have your monthly billing statement delivered. Typically, this is your home address, but can be any other address you request to have your monthly billing statement delivered, including a P.O. Box.
Capitalized Cost/Gross Capitalized Cost
The negotiated selling price of the vehicle, plus other costs included in the lease, such as acquisition fee, title and registration fees, insurance, etc. The Adjusted Capitalized Cost is the net amount capitalized at the beginning of a lease less the capitalized cost reduction.
Capitalized Cost Reduction
An initial payment in a lease either cash, net trade-in amount, or rebate that reduces the capitalized cost.
Closed-End Lease
A lease that runs for a fixed term. The lessor and lessee agree in the lease agreement what the residual value at lease-end will be.
Conventional Financing
The use of credit to finance the purchase of a vehicle over an agreed-upon duration, or term.
Depreciation
The amount of a vehicle's projected decline in value through normal use.
Down Payment
An initial amount paid to reduce the amount financed and lower the monthly payment requirement.
Gap Protection
A policy or agreement that provides financial protection to cover the gap between the lease obligation or loan obligation and insurance settlement in the event the vehicle is "totaled" or stolen.
Garaging Address (applicable for lease accounts only)
The address where the vehicle is physically kept.
Lease
A contract for the use of a vehicle between a lessee and lessor, with agreed-upon terms and conditions.
Lease Maturity Date
The date that the lease agreement is fulfilled and the vehicle is required to be returned to lessor.
Lessee
The person or organization to whom the vehicle is leased, signatory to the lease agreement.
Lessor
The organization that leases a vehicle.
Parking Ticket Administration Fee
An assessed fee to a lease account if a previously unpaid parking ticket for the lease vehicle was paid by the lessor.
Personal Property Tax
A state or locality imposed percentage tax which is assessed to owners of certain personal property, such as: automobiles and/or other vehicles, durable goods (usually excluding household goods and personal effects), stocks, bonds, etc. Personal Property Tax is assessed based on the fair market value of the property.
Purchase Option Price
The price determined at the beginning of a lease for which the lessee can purchase the vehicle at lease-end. May be the same as residual value but not always.
Residual Value
The estimated value of the vehicle at lease-end as established at the beginning of the lease.
Sales Tax
A state or locality imposed percentage tax which is assessed on certain goods and/or services at the point of purchase.
Security Deposit
The amount required by the lessor at the beginning of a lease to guarantee the lessee meets the terms defined in the lease. Refundable at lease-end provided all terms and conditions are met and there are no outstanding charges or payments due. In certain states referred to as a Reconditioning Reserve, which differs in that at lease-end it can only be applied to vehicle repair, and not to other amounts due.
Simple Interest Financing Method
A method of calculating interest that maximizes principal reduction beginning with the first payment, as opposed to other financing agreements which tailor your initial monthly installments almost entirely toward paying off interest, delaying the bulk of principal reduction.
Term
The duration of the lease or loan agreement typically expressed in months.
Title
The legal document used to identify the owner of a vehicle.
Trade In Value
The value of a vehicle applied to the purchase or lease of another vehicle.
Vehicle Turn-In Fee (or Disposition Fee)
The amount due at lease-end. This fee covers costs associated with returning the leased vehicle.