Showing posts with label security deposit. Show all posts
Showing posts with label security deposit. Show all posts

Tuesday, January 8, 2013

Lease Terms You Must Understand

Lessee - YOU! The authorized driver and person indicated on lease document. 
Lessor - The company that bought and owns the leased vehicle. 
Residual Value - The projected dollar value of leased vehicle at end of lease term. Amount is set by lessor or insurance company. 
Guaranteed Purchase Price - Same as residual value. 
Purchase Option - Same as residual value. 
Purchase Option Fee - This is additional profit. 
Capitalized Cost - The total dollar amount to be financed. May include all additional fees, taxes, tags, dealer profit, service contracts,etc. 
Capitalized Cost Reduction - The down payment. 
Security Deposit - This is an extra fee. Can be used at end of lease term to offset extra wear and tear charges or excess mileage charges. Usually equal to one months lease payment. Usually returned at end of lease term. 
Acquisition Cost - The dollar amount the lessor paid for the vehicle. 
Acquisition Fee - This is additional profit. 
Early Termination Fee - This is additional profit. 
Disposition Fee - Amount to cover preparing the leased vehicle for sale after lease term. Costs to cover cleaning, tune-up and maintenance on vehicle. 
Purchase Option - The opportunity to buy your leased vehicle at lease end for the stated residual value. 
Depreciation - The decline in value of the leased vehicle due to wear, tear and age. 
Mark-Up - Additional dealer profit.

What concerns you most about leasing? Did dealer disclose and explain these terms?