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Auto Loan and Lease Glossary

16. Lien
23. Rebate
28. Title

1. Adjusted Capitalized Cost
The amount capitalized at the beginning of the lease, equal to the gross capitalized cost minus the capitalized cost reduction. This amount is sometimes referred to as "adjusted cap cost" or "net capitalized cost."Back to Top
2. APR (Annual Percentage Rate)
The cost of a loan, including the interest rate and other fees.Back to Top
3. Automobile Lease
A contract by which one party (Lessor) gives to another (Lessees) the use and possession of an automobile for a specified time and for fixed payments.Back to Top
4. Base Monthly Payment
The portion of the monthly payment that covers depreciation, any amortized amounts, and rent charges. It is calculated by adding the amount of depreciation, any other amortized amounts, and rent charges, and dividing the total by the number of months in the lease. Monthly sales/use taxes are added to this base monthly payment to determine the total monthly payment.Back to Top
5. Blue Book
A standard reference guide for pricing cars.Back to Top
6. Capitalized Cost Reduction
The sum of any down payment, net trade-in allowance, and rebate and other non-cash credit used to reduce the gross capitalized cost. The capitalized cost reduction is subtracted from the gross capitalized cost to get the adjusted capitalized cost. Also known as "cap cost reduction." Back to Top
7. Credit Score
An evaluation of your creditworthiness that reflects your financial history and ability to pay debts.Back to Top
8. Depreciation
The amount of value your vehicle loses through wear and tear.Back to Top
9. Documentation Fee
Administrative costs associated with registration and title. This fee can range from under $50 to hundreds of dollars depending on your state.Back to Top
10. Early Termination Fee
A penalty for terminating a car lease early.Back to Top
11. Excess Mileage
The charge for driving a leased car more than the amount you agreed to in the lease.Back to Top
12. Extended Warranty
Additional warranty protection you can purchase for problems that surface after the manufacturer's warranty has expired.Back to Top
13. Finance Charge
The amount you pay for borrowing money, including interest, fees, and other service charges.Back to Top
14. Gross Capitalized Cost
The agreed-upon value of the vehicle plus any items agreed to be paid during the lease term (amortized amounts), such as the following: insurance, service contracts, taxes, bank acquisition fees and any prior credit or lease balance. Also known as "gross cap cost."Back to Top
15. Invoice Price
The cost of the vehicle to the dealer, not including any manufacturing incentives.Back to Top
16. Lien
A legal claim on ownership on your vehicle used as security for payment of a loan.Back to Top
17. MSRP (Manufacturer's Suggested Retail Price)
The suggested retail price from the vehicle's manufacturer.Back to Top
18. Monthly Payment
The total amount of interest and principal you pay for a car loan each month.Back to Top
19. Payoff Amount
Also known as "purchase price." If you intend on purchasing your vehicle, your payoff amount includes:
  • The specified purchase amount of your vehicle, as stated in your lease agreement.
  • Outstanding property taxes, as applicable in your state. If you currently reside, or have resided in the past in a state that assesses personal property taxes on leased vehicles, you will be sent a separate invoice when, and if, we receive the bill. This bill may arrive after you have received the final invoice of your lease or after you have purchased the leased vehicle.
  • Any outstanding monthly payments.
  • Any official fees or state taxes due.
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20. Prior Credit Balance
The portion of the gross capitalized cost representing the amount due under a previous credit contract after crediting the value of the vehicle traded in on the lease. Also known as "negative equity" or "negative trade-in balance."Back to Top
21. Prior Lease Balance
The portion of the gross capitalized cost representing the balance due from a previous lease agreement after crediting the value of the previously leased vehicle. Also known as "negative equity" or "negative trade-in balance."Back to Top
22. Purchase Option
Before or at the end of your lease term, you can purchase your leased vehicle according to the terms specified in your lease agreement.Back to Top
23. Rebate
An incentive manufacturers provide to consumers.Back to Top
24. Rent Charge
The amount charged in addition to the depreciation and any amortized amounts.Back to Top
25. Residual
The amount, agreed to in advance, that a car is worth at the end of a car lease.Back to Top
26. Sales/Use Taxes
Sales/use taxes are assessed on both leased and purchased vehicles.Back to Top
27. Termination or Turn-In Fee
A fee charged by a lessor to cover the costs of taking possession of the leased vehicle at the end of the lease.Back to Top
28. Title
A document that verifies a vehicle's ownership.Back to Top
29. Trade-In Allowance
The amount the dealer agrees to pay for your trade-in when you buy a new car.Back to Top
30. VIN (Vehicle Identification Number)
The unique 17-digit number found on every car.Back to Top