LEASING TERMINOLOGY

 

 

CAPITALIZED COST REDUCTION Down payment.
   
LESSEE User of the lease property.
   
LESSOR Owner of the lease property.
   
DEPRECIATION Estimated decline in the value of a leased asset.
   
OFF LEASE When a lease is terminated, the equipment that was being leased is referred to as this.
   
CLOSED-END LEASE  Lessor assumes risk for actual depreciation and MAY guarantee a fixed-purchase price. (NOW)
   
OPEN-END LEASE Lessee guarantees the residual value of the vehicle and assumes all risk. (THEN)
   
GROSS CAPITALIZED COST The starting balance of the lease or its original value plus administration fee and capitalized add-ons.
   
RENT CHARGES Funds charged to cover the lease company's cost of funds, operating expenses and profit.
   
RESIDUAL VALUE End of term value established at beginning of lease and used in calculation base monthly payment.
   
MAXIMUM RESIDUAL MSRP (MRM) Maximum amount that can be multiplied against the residual percentage factor to determine the residual value of the vehicle.
   
SECURITY DEPOSIT Refundable amount used to provide a measure of protection against non-compliance with the contract requirements.
   
ADMINISTRATION FEE Covers administration cost, and together with lease charges are part of the compensation to the lease company for administering the lease.
   
GAP PROTECTION Protection included in every smartlease, but might not be in other leasing contracts. This protection relieves the lessee of any deficiency on the lease if the vehicle is a total loss, or stolen and not recovered less their deductible.