Car Lease Glossary – Part 2

End-of-Lease Purchase Price – This amount is set up front and determines what you will pay for the vehicle if you choose to purchase it at the end of your lease.

Excess Mileage Charge – This is the per-mile fee that you will be charged if the vehicle is driven over the maximum amount of miles allowed per the lease contract.

Excess Wear-and-Tear – This is the fee you will have to pay if the vehicle is returned with excessive amounts of wear or damage.

GAP Insurance – This type of insurance covers any difference between what your insurance pays out and what you owe if your vehicle is completely lost in an accident.

Lease Term – The number of months you agree to pay for your lease.

Lessee – This is the individual who leased the vehicle from the dealer.

Lessor – This is the dealer from which the lease is obtained.

Monthly Payment – The payment amount agreed to be paid every month for the term of the lease.

Purchase Option – Gives the lessee the option to purchase the vehicle at the end of the lease for the pre-determined end-of-lease purchase price.

Residual Value – The predicted value of a vehicle as it ages.  This is most commonly given as a percentage of the original vehicle price.

Security Deposit – A deposit amount given in order to initiate the lease.  This is most often refundable.

Subvented Lease – This is when a manufacturer absorbs some of the cost to make the lease more desirable, usually in the form of a discount, low interest rate, or higher-than-normal residual value.

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