Glossary of Terms
Acquisition Fees: This is a fee that most lessors charge to cover cost of setting up the lease. It can include GAP Insurance, Residual Value Insurance and Contingent Liability Insurance.
Annual Percentage Rate (A.P.R.): used in both Retail sale and determining Lease Payment.
Capitalized Cost (Cap Cost): This is the financed amount of the lease and is comprised of the vehicle selling price, lease fees, sales tax or other added items.
Captive: This term is used to describe the auto manufacturer's finance arm.
Captive Lease Programs: These are the leases offered by the manufacturer's finance arm. They typically provide a cut rate money factor or an artificially inflated residual value to help lower your lease payment. This can limit your options during or at the end of the lease.
Cap Cost Reduction (CCR) : This is the same as "cash down" on a finance agreement. It helps lower the lease payment.
Closed-end lease: These are the most popular leases being offered today. They limit the liability of the consumer for the residual value at the end of the lease and are also covered under Regulation M.
Credit Score: This is part of your credit report and is used by most lessors to determine your rate. It is not necessarily used to determine if you would be approved for a lease. The higher the score the better and most lessors consider 700+ to be top tier or "A" credit.
Depreciation: Is the decrease in the value of the vehicle over a specific time period.
DMA: Designated Market Area. These are geographic areas defined by Nielsen for advertising purposes. Sometimes Incentive programs are designated for specific DMA's.
Excess Mileage Penalty: This is the amount you will pay for each mile you drive over your allotted amount specified on your lease agreement.
Extended Warranty: Also called a Vehicle Service Contract, picks up where the new car warranty leaves off.
Gap Insurance: In the event the vehicle is totaled or stolen, this insurance covers the difference between the lease payoff and the amount the lessee's insurance pays. This is important when you are dealing with a no-money down lease.
Independent Leasing Company: These companies are an alternative to leasing through the dealer. They can usually assist you with any make or model, new or used, and provide options through various finance sources.
Lease Payoff: This is the amount required to get out of your lease early. It may include additional fees for breaking your lease early.
Lessor: Is the party who is leasing the car to you. Even tough a dealership or broker may arrange the the lease, the lessor is often a bank or financial arm of a car manufacturer.
Low Mileage Lease: This provides on average 12,000 miles per year.
MSRP (Manufacturers Suggested Retail Price): This is the retail price of the vehicle that is displayed on the window of the vehicle. It is also used to calculate the residual value.
Market Value: Is the amount an individual or dealer is willing to purchase your vehicle for in a retail environment.
Money Factor: This is used to calculate the interest on the lease. For a comparable interest rate multiply this number by 2400. Chrysler financial uses money factors.
Monthly Depreciation: This is the amount the vehicle loses value each month and is part of the base monthly payment.
Monthly Interest: This is the monthly finance chare and is part of the base monthly payment.
Negative Equity: Is the difference between the market value of your vehicle and the current loan payoff, when the latter exceeds the former. Negative equity results when your vehicle declines in market value by more than you paid principle. Simply, you owe more than your car is worth.
Open Ended Lease: This type of lease is primarily used for business purposes as the lessee is responsible for the value of the vehicle at the end of the lease.
Purchase Option: This is the amount the vehicle can be purchased for at the end of the lease.
Purchase Price: This is the agreed to selling price of the vehicle.
Regulation M: Is the Federal regulation implementing the Consumer Leasing Ace of 1976 and requires lessors to provide more detailed pricing information in their leased vehicle.
Remarketing Company: This is a third party company that handles the disposition of the leased vehicle.
Residual Value: Used to calculate a lease payment and is the estimated value the vehicle will be worth at the end of the lease. The higher the number the lower the lease payment.
Standard Mile Lease: This provides on average for 15,000 miles per year.
Term: Is the length of the lease. Generally expressed in month terms i.e., 24, 36, 48. Sometimes Lease specials will be expressed as 27month or 39 month.
Totaled: This is the term used to describe a vehicle that has been in an accident and the cost of repairs is more that the value of the vehicle.
Ultra Low Mileage Lease: This provides on average only 10,000 miles per year.
Wear and Tear Insurance: An insurance policy that covers a certain amount of damage to a vehicle that the lessee would normally be charge for at the end of the lease.
Annual Percentage Rate (A.P.R.): used in both Retail sale and determining Lease Payment.
Capitalized Cost (Cap Cost): This is the financed amount of the lease and is comprised of the vehicle selling price, lease fees, sales tax or other added items.
Captive: This term is used to describe the auto manufacturer's finance arm.
Captive Lease Programs: These are the leases offered by the manufacturer's finance arm. They typically provide a cut rate money factor or an artificially inflated residual value to help lower your lease payment. This can limit your options during or at the end of the lease.
Cap Cost Reduction (CCR) : This is the same as "cash down" on a finance agreement. It helps lower the lease payment.
Closed-end lease: These are the most popular leases being offered today. They limit the liability of the consumer for the residual value at the end of the lease and are also covered under Regulation M.
Credit Score: This is part of your credit report and is used by most lessors to determine your rate. It is not necessarily used to determine if you would be approved for a lease. The higher the score the better and most lessors consider 700+ to be top tier or "A" credit.
Depreciation: Is the decrease in the value of the vehicle over a specific time period.
DMA: Designated Market Area. These are geographic areas defined by Nielsen for advertising purposes. Sometimes Incentive programs are designated for specific DMA's.
Excess Mileage Penalty: This is the amount you will pay for each mile you drive over your allotted amount specified on your lease agreement.
Extended Warranty: Also called a Vehicle Service Contract, picks up where the new car warranty leaves off.
Gap Insurance: In the event the vehicle is totaled or stolen, this insurance covers the difference between the lease payoff and the amount the lessee's insurance pays. This is important when you are dealing with a no-money down lease.
Independent Leasing Company: These companies are an alternative to leasing through the dealer. They can usually assist you with any make or model, new or used, and provide options through various finance sources.
Lease Payoff: This is the amount required to get out of your lease early. It may include additional fees for breaking your lease early.
Lessor: Is the party who is leasing the car to you. Even tough a dealership or broker may arrange the the lease, the lessor is often a bank or financial arm of a car manufacturer.
Low Mileage Lease: This provides on average 12,000 miles per year.
MSRP (Manufacturers Suggested Retail Price): This is the retail price of the vehicle that is displayed on the window of the vehicle. It is also used to calculate the residual value.
Market Value: Is the amount an individual or dealer is willing to purchase your vehicle for in a retail environment.
Money Factor: This is used to calculate the interest on the lease. For a comparable interest rate multiply this number by 2400. Chrysler financial uses money factors.
Monthly Depreciation: This is the amount the vehicle loses value each month and is part of the base monthly payment.
Monthly Interest: This is the monthly finance chare and is part of the base monthly payment.
Negative Equity: Is the difference between the market value of your vehicle and the current loan payoff, when the latter exceeds the former. Negative equity results when your vehicle declines in market value by more than you paid principle. Simply, you owe more than your car is worth.
Open Ended Lease: This type of lease is primarily used for business purposes as the lessee is responsible for the value of the vehicle at the end of the lease.
Purchase Option: This is the amount the vehicle can be purchased for at the end of the lease.
Purchase Price: This is the agreed to selling price of the vehicle.
Regulation M: Is the Federal regulation implementing the Consumer Leasing Ace of 1976 and requires lessors to provide more detailed pricing information in their leased vehicle.
Remarketing Company: This is a third party company that handles the disposition of the leased vehicle.
Residual Value: Used to calculate a lease payment and is the estimated value the vehicle will be worth at the end of the lease. The higher the number the lower the lease payment.
Standard Mile Lease: This provides on average for 15,000 miles per year.
Term: Is the length of the lease. Generally expressed in month terms i.e., 24, 36, 48. Sometimes Lease specials will be expressed as 27month or 39 month.
Totaled: This is the term used to describe a vehicle that has been in an accident and the cost of repairs is more that the value of the vehicle.
Ultra Low Mileage Lease: This provides on average only 10,000 miles per year.
Wear and Tear Insurance: An insurance policy that covers a certain amount of damage to a vehicle that the lessee would normally be charge for at the end of the lease.
