Like with all financial contracts, a car lease can be confusing for those who aren’t savvy to the terminology. Fortunately, a few basic terms can make the difference between a bad deal and good one. Here’s a quick rundown of some common car lease terms from us here at Corwin Dodge Ram.
Base Monthly Payment – This is the same as a monthly payment when buying a car. Instead of paying off the total cost, however, this cost covers any finance charges, fees, and depreciation of the vehicle.
Capitalized Cost Reduction – Essentially the same as a down payment when buying a car, this can lower the monthly payment and could make the difference in the lease’s approval.
Closed-End Lease – The most common type of lease, this ensures that the driver doesn’t owe any extra money on the vehicle once the contract reaches maturity.
Depreciation – This is what the driver pays for in the monthly payment. When a vehicle is leased, the lessee pays the difference between the new value and predetermined used value.
Excess Mileage Charge – Most lease contracts specifically state the maximum amount of miles the vehicle can be driven. Every mile over that amount will result in an additional charge once the contract reaches maturity.
You May Also Be Interested In: