Glossary Of Terms (alphabetical)
This fee is charged at the inception of the lease, and is included in the total capitalized cost. This fee covers costs of originating and processing the lease.This is the IRR (internal rate of return) of the complete lease cashflows, including all fees and expenses.
This rate fully reflects all aspects of the lease, and incorporates it all into a single equivalent financing rate. When all is said and done, the lease is simply providing you with some upfront cash financing, which in effect you repay over time through a combination of lease payments, fees, and lost resale opportunity. This is the implied rate on that total repayment stream. This rate can then be used to compare to other lease or financing alternatives.
Also referred to as the "capcost". The gross capitalized cost is the total cost of the vehicle plus all other upfront costs. The gross capitalized cost is then reduced by the "capcost reduction", which is the sum of the cash downpayment and the amount of any trade-in allowance or rebate used to reduce the capitalized cost. The gross capitalized cost minus the capcost reduction is then called the adjusted capitalized cost, or net capitalized cost. This is the fee charged by the dealer to prepare the vehicle for delivery to the customer. It is included in the total capitalized cost, but is normally stated separately from the price of the vehicle. This is the delivery cost, which is included in the total capitalized cost of the vehicle. It is normally stated separately from the price of the vehicle. This is a fee due at the end of the lease to compensate the leasing company for the expenses of selling or otherwise processing the disposition of the vehicle.The downpayment amount, sometimes also called the "capcost reduction", refers to the amount of any cash payment you make at the beginning of the lease in order to reduce the total capitalized cost. Often you have a choice as to how much upfront cash you want to pay. The more you reduce the capcost, the lower your lease payment will be.
You should not include the amount of the security deposit, license and registration fees, or the first normal lease payment (which is also paid at the beginning of the lease).
Any other cash amount you pay upfront should be included in the downpayment amount. For example, if you pay the acquisition fee or gap insurance fee in cash you should include these amounts in the downpayment.
This represents the increase in the overall cost of the lease from all the various fees and expenses, including the acquisition fee, security deposit, gap insurance fee, administrative fees, prepaid mileage charge, and disposition fee.
It is determined by calculating the IRR (internal rate of return) of the lease cashflows including all these fees and expenses. The difference between this IRR and the nominal lease rate is then said to be the effect of fees and expenses.
If there is a factory-to-customer rebate that you are applying to reduce the cap cost of the lease, enter this amount here. If you are simply walking away with the cash from the rebate, do not enter it. In the event a leased vehicle is stolen or totaled, there can be a difference between the remaining balance owed under the lease, and the value of a car according to your insurance company. So-called "gap insurance" covers this amount. Sometimes gap insurance is included in the lease for free, or there may be an upfront fee charged if you choose to include gap insurance. License and registration fees are normally paid in cash at the beginning of the lease.This is a number, expressed as a small decimal (example: 0.00275), that is commonly used by leasing companies in a particular formula to compute the lease payment. Not all leasing companies use this formula. The money factor is simply one method many lessors use to arrive at the payment amount.
All that really matters is the actual lease payment amount. If you know the lease payment amount, you can simply enter the payment amount directly rather than use the money factor.
However, if you know that the leasing company uses the money factor method to calculate lease payment (most U.S. lessors do), then by entering the money factor rather than the lease payment itself you can play "what if" with various residual, downpayment amounts, etc., and let the calculator automatically recalculate the payment.
In some cases the leasing company charges a monthly fee in addition to the stated base lease payment. If you know the lease payment amount, you can simply enter the payment amount here. Do not include any sales tax or monthly administrative fees. Alternatively, you may wish to enter the money factor, and let the calculator determine the payment amount. This is the rate most ofter stated by leasing companies, if they state a rate at all. It refers to the internal rate of return (IRR) that relates the monthly lease payment to the net capitalized cost and the residual value. There may be a fee charged at the beginning of the lease in order to allow you to drive a greater number of miles. You should enter the negotiated price of the vehicle which you have agreed upon with the dealer, including the value of all options. This is not the same as MSRP or invoice cost. Do not include destination or dealer prep charges, since these are entered separately.This is the assumed end-of-term value of the vehicle formally established at the beginning of the lease and used in calculating your base monthly lease payment. The residual value is a number that is determined by the leasing company. The lower the residual value, the higher will be your monthly payment, since the lessor will calculate the payment so as to compensate for the greater anticipated decline in the value of the vehicle.
You may be required to pay a security deposit at the beginning of the lease. This amount is returned to you at the end of the lease (assuming of course it is not used to cover damages, late fees, etc.). Enter the number of months in the lease term. Normally the amount of the trade-in value of your old vehicle is used to reduce the capitalized cost of the lease on your new vehicle. If so, enter this amount. If you are simply walking away with the cash from the trade-in, you should not enter the amount.