Every term you'll encounter on a lease worksheet, defined plainly. Bookmark this page — you'll come back to it.
A one-time fee charged by the leasing company at the start of the lease to cover administrative costs of setting up the lease. Typically $595 to $995 depending on the manufacturer. Non-negotiable, but worth knowing about so it doesn't surprise you at signing.
The agreed-upon selling price of the vehicle at the start of the lease — effectively the "purchase price" the lease is calculated against. Lower cap cost = lower monthly payment. This is the single most important number to negotiate.
The lease equivalent of a "down payment." Money paid upfront that reduces the cap cost and therefore the monthly payment. Generally not recommended — if the car is totaled or stolen early in the lease, this money is typically not recoverable.
The standard consumer lease type. The residual value is fixed at lease signing, and you have no obligation if the actual market value at lease end is lower. You simply return the keys.
A fee charged at the end of a lease if you return the vehicle (rather than purchasing it or rolling into a new lease with the same brand). Typically $350 to $500. Often waived if you lease another vehicle from the same manufacturer.
The total amount of money required at lease signing. Typically includes first month's payment, acquisition fee, registration, doc fees, and any cap cost reduction. A "sign-and-drive" lease has minimal drive-off — sometimes just the first payment.
Ending a lease before the contracted term is up. Almost always expensive if done as a straight termination. Better alternatives include lease transfers, manufacturer pull-ahead programs, or trading into a new lease.
A per-mile charge applied at lease end if you exceed your contracted mileage allowance. Typically $0.20 to $0.30 per mile for luxury vehicles. Pre-purchasing additional miles upfront is significantly cheaper than paying overage at lease end.
Damage beyond what the leasing company considers normal use. Examples: dents larger than a credit card, scratches that go through the paint, torn upholstery, missing keys or floor mats. Most leases include an inspection 60 to 90 days before maturity so you can address issues at lower cost than dealer-rate repairs.
Coverage that pays the difference ("gap") between what you owe on the lease and what your auto insurance pays out if the vehicle is totaled or stolen. Built into most captive (manufacturer) leases at no extra cost. Always confirm in writing.
Transferring your lease to another qualified individual who takes over the remaining payments. Allowed by most manufacturers (with credit approval of the assumee), prohibited by a few. A way to exit a lease early with minimal cost.
You — the person leasing the vehicle.
The leasing company that technically owns the vehicle and leases it to you. For luxury brands, this is typically the manufacturer's captive finance arm (Mercedes-Benz Financial, BMW Financial Services, Porsche Financial Services, etc.).
The interest rate on a lease, expressed as a small decimal (e.g., 0.00125). Multiply by 2,400 to get the rough APR equivalent. Determined by the captive lender and your credit profile, but often marked up by dealers if you don't push back. We negotiate these to the floor.
The sticker price set by the manufacturer. Residual values are typically expressed as a percentage of MSRP. The actual cap cost (selling price) should be below MSRP in most cases.
A lease where the lessee bears the risk of the vehicle's actual depreciation. If the car is worth less than the projected residual at lease end, the lessee owes the difference. Generally a commercial-fleet structure, not used for consumer luxury leases.
A manufacturer-sponsored offer that waives the final 1 to 6 months of your current lease payments if you lease another vehicle from the same brand. Common in summer and end-of-year selling seasons. We always check whether one is active before discussing your next lease.
The predetermined value of the vehicle at the end of the lease, set at lease signing. Expressed as a percentage of MSRP (e.g., 58% residual on a 36-month lease). Higher residual = lower depreciation cost = lower monthly payment. A major reason some vehicles "lease well" and others don't.
A lease structured so that nothing (or almost nothing) is due at signing beyond the first month's payment. Achieved by rolling the acquisition fee, registration, and other drive-off costs into the monthly payment. Slightly higher monthly payment, dramatically lower out-of-pocket at signing.
A lease where the manufacturer subsidizes either the money factor (subvented rate), the residual value (subvented residual), or both, in order to push monthly payments lower and move inventory. Most published "lease specials" you see advertised are subvented.
The length of the lease, expressed in months. The most common luxury lease terms are 24, 36, and 39 months. 36 is the sweet spot for most clients — long enough for residuals to settle, short enough that the car stays under warranty the entire time.
Knowing the vocabulary is half the battle. Let us handle the other half — submit a request and we'll get sourcing.