Car Lease Glossary »

Car Lease Glossary

You can’t be sure you’re getting a good deal on your car lease unless
you understand what the salesperson is talking about. Below are some
common leasing terms that you may hear when you start shopping for car
lease offers. Understanding these terms will help you get past the
fast-talking salesman to true savings on your car lease.

Acquisition fee (also sometimes called a bank fee or initiation fee)
This is a fee charged by the lender who is financing the lease. They
usually start at about $400, and unfortunately they’re often not

Adjusted capitalized cost
You can think of this as the car’s value you that will be financing,
minus any up front payments or incentives. This is the amount that
determines your monthly payment. If you negotiate a price of $26,000
on your new car and put $3,000 down, the adjusted capitalized cost is

Dealer preparation fee
This is a fee that dealers charge for the work they do to get the car
ready for sale. It really amounts to little more than washing it and
filling the tank, so you should try to get it removed.

Gap insurance
Gap insurance is a policy that covers the difference between the
amount you owe over the course of the lease, and the current market
value of the car that would be paid by your insurance if the car was
stolen or totaled. This is important particularly at the beginning of
the lease.

This is a provision in the lease contract that protects the lessor
from any charges that the lessee incurs. This prevents the lessor from
being charged for parking and traffic tickets that the lessee

Mileage charge
Leases include limitations for the number of miles you can drive the
car during the lease term. If you drive the car over those limits, you
will incur this fee, usually calculated per mile. These charges add up
quickly, so make sure you have a good idea of how many miles you need
before you sign.

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