| |
| |
|
Leases & Leasing Information |
|
|
|
Terms to Know Before Leasing A Vehicle - Leasing Jargon Simplified
So, you've decided that you want to lease that next vehicle.Can't really blame you. With today's incentives, rebates, and favourable lease rates why wouldn't you. Not only do you get to drive a new car, but a new car that you wouldn't otherwise be able to afford if you were to purchase and finance it. Buyer beware though. With leasing comes new and sometimes rather confusing vocabulary. Don't get lost in a sea of leasing jargon. Protect yourself. Learn and understand the industry language. For those seriously thinking of leasing that next vehicle, here is a useful glossary of "new" terminology that you should familiarize yourself with BEFORE you negotiate a lease: Acquisition Fee: An administrative charge levied by the leasing company for processing a lease. This fee is typically NOT negotiable and can have a significant bearing on the overall cost of the lease. Base Interest Rate: This is the cost of leasing and using a vehicle and is measured by the interest paid over the lease term. Buy at end-of-term interest rate: This is the net interest rate for the lease if the lessee, at the end of the lease term, purchases the vehicle at the end-of-lease purchase price. Capitalized Cost: This is the total purchase price of the vehicle. The price includes the cost of all extras such as vehicle options, extended warranties, life insurance, and rustproofing. The capitalized cost equals the amount you would pay for the vehicle if the vehicle were being purchased. Capitalized Cost Reduction: A capital cost reduction is a down payment, in the form of cash or trade-in, that is applied to the final purchase price of the vehicle reducing the monthly lease payment. Closed End Lease: Leases in which the lessee's financial obligation rests only with the negotiated monthly lease payment. Since the residual value of the vehicle is stated in the lease contract, the lessee is not financially responsible if the actual value of the vehicle is less than the stated residual value. The lessee need only return the vehicle at the end of the lease term with no further obligation. Dealer Participation: A rebate or discount, contributed by the dealer, reducing the final purchase price of the vehicle. Depreciation: The decrease in value of a vehicle over time. Depreciation in automobile leasing is the difference in value between the cost of a new vehicle and the value of the vehicle at the end of the lease term. Disposition Fee: A fee charged by the lessor at the end of a lease to ready the car for sale. The lessor may apply this fee against the deposit made by the lessee at the beginning of the lease term. Down Payment: A sum of money paid at the beginning of a lease contract, usually at the time of signing, that is applied to the final purchase price. In leasing, the down payment is referred to as the capitalized cost reduction. Typically, the larger the down payment, the smaller the lease payment. Early Termination Fee: A penalty paid by the lessee for terminating a lease contract early. A lessee pays for the depreciation of a vehicle in equal monthly payments. Since a vehicle's depreciation is highest in the first months of a lease, terminating a lease early results in the lessee using more of the vehicle's value than what they've paid for subjecting the lessee to penalty. End-of-Lease Purchase Price: Also known as the residual value. This is the price at which the lessee may purchase the vehicle at the end of the lease term. Excess Wear & Tear: Wear and tear beyond what is deemed acceptable by the leasing company. It is the responsibility of the lessee to take reasonable care of the car and to ensure it is returned at the end of the lease term in good condition. Bald tires, body dents, and engine trouble due to neglect could subject the lessee to repair and replacement charges. Gap Insurance: The name given to a type of insurance coverage that covers the difference between the actual cash value of the leased vehicle and what is still owed on the lease contract. If a leased vehicle is destroyed in an accident or stolen, gap insurance coverage protects the lessee against additional losses due to "gaps " between the insurance settlement and the lessee's financial obligations set out in the lease contract. Independent Lessor: These are non-traditional lessors, usually an individual business, that can structure and write a lease for most makes and models of vehicles. The terms and conditions of the lease agreement can be customized to accommodate different lease and mileage conditions. Lease Extension: This is the continuation of a lease, beyond the original lease contract.Payments are continued on a month-by-month basis at the same sum negotiated at the beginning of the lease term. Lease Term: This is the length of the lease contract. Most vehicles can be leased for 12, 24, 36, 48, and 60 month lease terms. The monthly payment of a lease will vary depending on the length of the lease term. Lessee: Name assigned to a person or party who signs a lease and agrees to assume responsibility for a vehicle and the lease payments. Lessor: Name assigned to a person or party that owns the vehicle and agrees to lease it to the lessee. Mileage Allowance: Lease agreements establish a maximum mileage allowance that the car may be driven over the life of the lease. The agreement will also specify the cost per mile or kilometer the car is driven over and above the allowance that is due and payable at the end of the lease term. Money Factor: This is a number used to calculate the base interest rate of a lease. To arrive at a base interest rate, leasing companies will multiply a money factor by 2400. The money factor of a lease is known by the leasing and sales consultant at the dealership and is used to calculate the cost of money in the same fashion as an interest rate does. The lower the money factor, the lower the monthly lease payments. Monthly Payment: A payment made on a specified date each and every month as specified in the lease contract. Monthly lease payments calculated on a lease contract typically include all applicable taxes. Net Interest Rate: This is the total interest rate for a lease and represents the truecost of the lease. The lower the net interest rate, the lower the cost of the lease. Open-End Lease: Leases in which the lessee's financial obligation may exceed the negotiated monthly lease payment. In an open-end lease the residual value is set at the beginning of the lease term. The lessee is financially responsible if the actual value of the vehicle is less than the stated residual value. Purchase Option: Option extended to the lessee, at the end of a lease contract, to purchase the vehicle at the pre-determined purchase price. The pre-determined purchase price is normally the stated residual value in the lease contract. Residual Penalty: This is the penalty a lessee pays if the end-of-lease purchase price is greater than the expected value of the vehicle at the end of the lease term. Residual Value: This is the expected or pre-determined value of a leased vehicle at the end of the lease contract. The stated residual value on a lease contract is normally the buyout price at the end of a lease term. The residual value also determines whether the lessee should purchase the vehicle at the end of the lease term. If the residual value is less than the actual market value it would be advantageous for the lessee to buy the vehicle and sell it to a third party. Security Deposit: This is a sum of money, paid up front, as security for excess wear and tear on the leased vehicle. The amount is refunded if the vehicle is returned in good condition.In some cases, the deposit may be applied against the final monthly payment. Good luck and happy negotiating! William Bolton is founder, owner, and operator of Leasedwheels.com, a website specializing in auto lease transfers and assumptions. If you're stuck in a lease you need out of or wish to take over an existing lease on a short-term basis with no money down, visit: http://www.leasedwheels.com
MORE RESOURCES:
leases leasing - Google News |
|
|
|
RELATED ARTICLES
So You Want to be a Landlord? The residual income from owning rental properties may bring more money into your life than the fast flip in the long term. If nothing else, the stress is reduced because a well-chosen investment will pay for itself until you the market is ready for you to sell. How To Choose An Equipment Leasing Company Leasing has become a preferred form of equipment financing, accounting for more than 30% of business equipment acquisitions. Each year, thousands of U. The Leverage of the Lease In today's rapidly changing business environment it makes sense to consider all the options before paying for your business equipment - whether it's a photocopier, computer system, computer hardware or software, telephone system, security equipment, office furniture or anything else. Many business people will give great consideration to the actual purchase, getting quotes from different suppliers and considering different choices. Insiders Guide to Snaring the Best Lease Deal Every year, thousands of business owners and financial managers are faced with the task of obtaining attractive financing for equipment their firms want to acquire. Snaring the best leasing arrangement requires only a bit of planning and a smidgeon of finesse. Dodging Leasings Grim Reaper: Navigating a Payment Default In her third Harry Potter novel, ?The Prisoner of Azkaban?, J.K. Lease Contracts - The Meaning of Joint and Several When you see the phrase "joint and several" in a legal document or contract it means that that the parties on one side of the agreement are responsible individually and collectively for the terms of the agreement.Example: In the case of two tenants signing a lease agreement, "joint" means they are jointly responsible for the rent. Terms to Know Before Leasing A Vehicle - Leasing Jargon Simplified So, you've decided that you want to lease that next vehicle.Can't really blame you. Warning - This Lease Might Explode Any Minute Mike Caringi, owner of a small New Jersey business that sells pumps, found himself facing a gut-wrenching dilemma last summer. Should he continue paying $ 1,500 each month for essential telecommunications services he no longer receives and for leased equipment he claims was never installed? Or, should he stop making payments and face a potential lawsuit from the firm that financed the equipment under a 'hell or high water' lease? Mr. True Tenant Tales, Volume One Working with tenants can be an amazing experience. (Owners and contractors are equally astounding, but those are subjects for another day. Landlord Tips And Tricks Every real estate investor dealing in rental homes has done his own clean-up and fix-up, at least in the early years. Landlords also become very skilled at managing tenants after being burned a few times. What Happens When the Anchor Tenant Moves and You Are On a Ten-year Lease? Recently there was an article in the Houston Business Journal of the anchor store in many shopping centers through out Houston pulling out. Kmart, took out some stores, so did three other big box stores and a few consumer electronics places and larger furniture stores, now Albertson's has left. Basic Things You Should Know About A Lease Purchase Contract What exactly is a contract?By definition, a contract is an agreement between two or more parties to do, or to refrain from doing, a particular thing in exchange for something valuable. The parties can be individuals, businesses, organizations and government agencies. What to Consider Before Leasing a Car Some people choose to lease a car rather than buying one outright. Here are some useful tips on what to consider before leasing a car:The most important thing to remember is that you do not own the vehicle. Explore An Effective Revolutionary Approach To Traditional Business Financing For business owners who need working capital now there is a revolutionary, tax-deductible cash flow solution that frees up capital and gives them the money they need to grow. This diversified cash flow solutions is known as "asset leasing. The Lease And Purchase Option If you have an investment property, should you rent it or sell it? The answer to that question is that you should do both. If you have lots of time on your hands and are handy with tools, you can choose to rent out your property. Venture Leasing: Startup Financing On the Rise According to Pricewaterhouse Coopers, investment by institutional venture capitalists in startups grew from less than $3.0 billion at the beginning of the 1990's to over $106 billion in 2000. Lease or Buy? That is Always the Question with Car Financing Leasing is a perfectly viable and legitimate way to finance a new car. Although leasing offers attractive benefits, it is somewhat more complex than buying with a loan. Using Equipment Leasing as a Competitive Weapon Most great generals know how to design winning battle plans. They also know how to use their resources to gain advantages over the enemy. Interim Rent: Equipment Leasing's Trap Door Many lessees enter into lease transactions that they believe are competitive based on faulty rate assumptions. Most lease rate calculations don't take interim rent into consideration. How Venture Leasing Added Millions To A Startups Equity Value Craig Berman beamed noticeably after completing his board presentation. Berman, CEO of a startup that develops nanotechnology applications for the defense industry, had just closed a $ 20 million equity round.
|
| Article List | Index | Site Map |
|
All logos, trademarks and articles on this site are property and copyright of their respective owner(s).
The comments are property of their posters, all the rest is Copyright © 2006 CanadaSEEK.com - All Rights Reserved. |