Use this as a quick lookup while reading a quote. For the full payment math, start with Leasing 101.
Acquisition fee
The lessor's charge for setting up a lease, sometimes called a bank or assignment fee. Ask whether the quoted amount includes a dealer markup.
Actual cash value
An estimate of the car's value just before a loss. An insurer's settlement and a lease payoff can be different amounts.
Adjusted capitalized cost
The gross cap cost after cap cost reductions and any other financed amounts are accounted for. It is the starting balance in common lease payment math.
Agreed-upon vehicle value
The vehicle price agreed with the dealer for the lease. Ask what accessories and delivery charges it includes.
Annual percentage rate (APR)
A standardized way to state the yearly cost of borrowing for a loan, including certain charges. Leases do not have an APR. Multiplying a money factor by 2,400 gives a rough percentage for comparing quotes, and that percentage may not measure the overall cost of financing the lease.
Assignment
A transfer of contract rights to another party, such as when a dealer assigns a lease to a finance company. Read any approval conditions tied to it.
Automatic payment
A payment sent automatically from your account on a schedule. Confirm the amount and date, and keep enough money available to avoid missed payments.
Base monthly payment
The monthly payment before tax and any separately added monthly charges. In a common lease it combines depreciation and rent.
Bill of lading
The shipping document that records the vehicle handoff and transport details. Record the car's condition at pickup and delivery as well.
Broker
A business that helps arrange a deal rather than necessarily supplying the car or lease funding itself. Ask who pays it, what it does and whether its fee is in your quote.
Buy rate
The lessor's base money factor for the applicable lease program and approved credit tier. The dealer's quoted money factor may include a markup.
Buyout
A purchase of the leased vehicle under a purchase option. Get a dated, itemized quote rather than assuming the residual is the entire bill.
Capitalized cost
The balance of vehicle price and other amounts paid through the lease. Ask whether a quoted cap cost means gross or adjusted cap cost.
Capitalized cost reduction
Money or credits used to lower the gross cap cost, such as cash, trade equity or eligible rebates. It is not a refundable security deposit.
Captive finance company
A finance company affiliated with a vehicle manufacturer. Its lease program may have incentives that another lessor does not offer.
Cash down
Cash you put toward a cap cost reduction. A dealer may use “down” loosely, so ask whether it means this reduction or all signing money.
Closed-end lease
A lease where you generally do not owe a market-value shortfall at the scheduled end if you return the car as agreed. Unpaid bills, excess miles, wear and other contract charges can still be due.
Co-lessee
Another person who signs the lease with you and takes on obligations under it. Agreeing to share use of the car does not limit the contract's payment duties.
Conditional delivery
Taking a car before every required approval or assignment condition is settled. Read what happens if the deal is not approved before driving away.
Credit tier
A category a lender uses when evaluating an application and setting terms. A quote based on a top tier is not a promise of approval at that tier.
Dealer discount
A reduction from the dealer's price, separate from a manufacturer or lessor rebate. Ask to see the selling price before rebates.
Depreciation
A loss in vehicle value over time. For lease payment math, the depreciation portion uses the difference between adjusted cap cost and residual, spread over the term.
Destination charge
A vehicle delivery charge often shown on the window sticker. Check whether it is already included in the stated MSRP and price before adding it again.
Disposition fee
A contract fee that may apply when you return the car. A waiver may depend on specific conditions, so get those in writing.
Doc fee
A dealer charge for handling paperwork. It is different from government title and registration fees, and state rules vary.
Down payment
In lease discussions, often the cash cap cost reduction. Confirm the meaning because it is not the same as total due at signing.
Drive-off
An informal name for the money needed to start the deal. Ask for the itemized amount due at signing or delivery.
Due at signing
The total required when the lease starts, which may include the first payment, fees, taxes, a reduction and deposits. Ask how much is cash and how much comes from rebates or trade equity.
Early termination
Ending a lease before its scheduled finish. Returning the car does not by itself settle the amount owed.
Effective monthly cost
A comparison estimate that spreads nonrefundable lease spending over the term. State what it includes, count a first payment only once and keep refundable deposits separate.
Equity
Value above the amount needed to buy or pay off the vehicle. Possible lease equity depends on a permitted transaction and costs; returning the car does not automatically pay it to you.
Excess mileage
Miles beyond the contract's allowance. A return may trigger the stated per-mile charge.
Excess wear
Damage or wear beyond the lessor's return standards. Get the standards and inspection report before deciding whether to repair something.
Extended service contract
An agreement covering specified repairs beyond or alongside a warranty. Compare the actual coverage dates, miles, exclusions and deductible with the factory warranty.
Fair market value
An estimate of what a vehicle would sell for in a particular market. A retail asking price, a trade offer and an insurance valuation need not match.
First payment
The first scheduled lease installment, often paid at signing. If included in the signing total, do not count it again as a later payment.
GAP
Guaranteed asset protection, provided through a waiver or insurance product. It may cover a qualifying insurance-to-payoff shortfall after a theft or total loss, subject to its terms.
Gross capitalized cost
The agreed vehicle value plus other amounts paid over the lease, such as financed fees or an old debt. Get a written itemization.
Incentive
A discount or credit offered to encourage a deal. Confirm eligibility, expiry and whether it can be combined with other offers.
Insurance deductible
The amount you bear on a covered insurance claim under your policy. GAP may not cover it.
Lease assumption
An approved transfer of lease duties to a new lessee. Availability, fees and whether the original lessee stays liable depend on the lessor and contract.
Lease extension
An agreement to keep the lease beyond its original end. Ask how payments, miles, warranty and the buyout change before agreeing.
Lease program
A lessor's set of terms for eligible vehicles, dates, locations and applicants. A program for another term or credit tier may not apply to your quote.
Lessee
The person or business taking the lease and accepting its duties. That is you when you lease a car.
Lessor
The party providing the lease and owning the vehicle under it. The company servicing your account may also handle payments and lease-end questions.
Mileage allowance
The miles included under the lease. Check the total, the starting odometer reading and the charge for going over.
Money factor
The decimal many lessors use to calculate the rent charge. Ask for it directly rather than trying to read it from a payment alone.
MSRP
Manufacturer's suggested retail price, commonly shown on the window sticker. It can be used to calculate the residual but is not the negotiated selling price.
Multiple security deposits (MSDs)
Extra refundable deposits that some lease programs accept in return for a lower money factor. Availability, savings, deductions and refund terms depend on the program.
Negative equity
The amount by which a payoff exceeds the value credited for a trade. Rolling it into a new lease means paying old debt through the new deal.
One-pay lease
A lease paid with one upfront lease payment rather than a series of monthly payments. Rate, tax and total-loss refund rules are specific to the lessor's program.
Open-end lease
A lease where you may owe money at the end if the car is worth less than the residual. Federal law limits how much the lessor can usually collect. Read it carefully before treating it like a closed-end return.
Out-the-door price
A fully itemized vehicle purchase price including applicable taxes and fees. For a lease, also ask for the cap cost, payment schedule and total due at signing; the phrase alone is not enough.
Payment packing
Building unwanted products or unexplained charges into a payment quote. An itemized quote without optional products makes the comparison clearer.
Payoff quote
A dated amount and set of instructions for settling or purchasing a vehicle under the applicable option. Ask who may use it, what it includes and when it expires.
Positive equity
Value above the relevant payoff or purchase cost. To use it, you need a permitted deal with actual proceeds after fees and taxes.
Prepaid maintenance
A plan that pays for listed scheduled services under its terms. It is different from repair coverage and is not automatically included in a lease.
Pull-ahead program
An offer that may waive specified remaining lease charges when you enter another deal. Get the actual waiver terms so you can distinguish forgiven amounts from debt rolled forward.
Purchase option
A contract right to buy the vehicle at a stated time and price or by a stated method. Check additional taxes, fees and who can exercise the option.
Purchase-option fee
A contract charge that may apply when you buy the leased vehicle. Ask for it in the itemized buyout total.
Realized value
The amount credited for the vehicle under the contract's valuation or sale process. It can matter in an early termination or an open-end lease.
Rebate
A credit from a manufacturer, lessor or other program, subject to eligibility. Trace it through the quote once rather than counting it as both a price discount and a second credit.
Registration fee
A government charge for registering the vehicle. Amounts and renewal timing depend on the jurisdiction.
Rent charge
The financing charge in a lease, separate from depreciation. In common money-factor math, monthly rent equals adjusted cap cost plus residual, multiplied by the money factor.
Residual percentage
The percentage applied to an eligible MSRP to set the residual in some programs. Confirm the dollar amount and MSRP basis with the lessor.
Residual value
The projected end value used to calculate the lease payment. It is not a guaranteed market price or necessarily the complete purchase-option bill.
Sales and use tax
Taxes that can apply to leasing or buying a vehicle. What gets taxed, when it is collected and any credits depend on state and local rules.
Security deposit
Money held to secure your lease obligations, refundable subject to permitted deductions. It is separate from a nonrefundable cap cost reduction.
Selling price
The vehicle price negotiated with the dealer. Request it before rebates and ask what accessories and charges are included.
Shipping broker
A company that arranges vehicle transportation with a carrier. It is not necessarily the company that loads and moves the car.
Shipping carrier
The company that physically transports the vehicle. Confirm its identity, authority and cargo coverage before pickup.
Single-payment lease
Another name for a one-pay lease. Ask for the full payment and refund terms rather than treating it as a monthly lease with a large down payment.
Spot delivery
Delivery of a vehicle before all financing conditions are settled. Ask whether the agreement is final before taking the keys.
Term
The length of the lease, usually stated in months. Changing it can also change the residual, money factor and warranty overlap.
Third-party buyout
A purchase of the leased car by someone other than the lessee, such as an outside dealer. The lessor may restrict it or use a different payoff.
Title
The ownership record for the vehicle. During a lease, the lessor owns the car; a buyout requires the proper title transfer.
Total loss
An insurer's determination that a vehicle is a total loss under its policy and applicable rules. The insurance settlement does not automatically settle the lease.
Trade allowance
The amount offered for your trade before its payoff is subtracted. Compare it with separate offers and trace the net amount through the deal.
Trade equity
The trade allowance minus the amount owed on the old vehicle. If positive equity is spent in the new lease, include it when comparing your cost.
VIN
Vehicle identification number, the 17-character identifier used for a modern vehicle. Match the quoted VIN with the car and final contract.
Wear waiver
A product or contract provision that may forgive specified return charges within limits. Read exclusions and limits before treating it as damage insurance.
Zero down
Often means no cash cap cost reduction, while fees and the first payment may still be due. Ask for the total signing bill.
Zero due at signing
A quote requiring no payment from you at signing under its stated terms. Ask what is rolled into the payment and whether rebates or trade equity are funding the upfront amounts.
Sources and local rules
These are plain-language explanations, not replacements for your contract. Regulation M covers federal lease disclosures. The Federal Reserve provides background on residual value, rent, deposits and early termination.
Taxes, fee limits and title rules vary. Check your state, including our guides for Florida, California, New York and Texas. Ask the lessor about your specific program and contract.