Disposition Fee
Definition
- A fee charged by some dealers and lessors at the end of a car lease. The disposition fee charges consumers for returning vehicles, and the fees paid go towards the cost of making sure the vehicle is road worthy before reselling it. These expenses may include maintenance, reconditioning (fixing minor damage) or cleaning of the vehicle, or to cover any storage, transportation, inspection, auction or administrative fees.
Synonyms
handling charge, administration fee
Related Terms and Acronyms
- Acquisition Fee — Definition,
- A fee charged by some leasing companies for originating the loan, just as mortgage lenders charge points as an origination fee. This fee is often not specified in a contract, but rolled into the capitalized cost when calculating monthly payments.
- Closed-end Lease — Definition,
- The most common type of car lease. The lessee may return the car at the end of the lease term, pay any end-of-lease costs, such as the disposition fee, and the lease agreement is over. In a closed-end lease, the lender assumes the risk of predicting the value of the vehicle (its residual value) at the end of the lease's term. Closed-end lease payments are somewhat higher than open-end lease payments.
- Destination Charge — Definition,
- A fee charged for transporting a vehicle to the dealer from the manufacturer or port of entry. This charge is passed on to the buyer without any mark-up.
- Excess Wear Charge — Definition,
- Most leases set limits for wear and tear on the car during the lease term. The lessee must pay charges for exceeding the limits when turning in the car at the end of the lease.
- Preparation Charges — Definition,
- An additional charge that dealers try to impose on buyers. It represents pure profit for the dealers, who have already been paid by the manufacturer for the cost of preparing the car for sale.
- Security Deposit (sec, sec dep) — Abbreviation,
- In automobile leases, sometimes called reconditioning reserve. An amount, often the same as one month's payment, the dealer holds to be sure that the car will be returned in good condition. It is to be returned, less fees and damage charges, at the end of the lease.
- Walk-away Lease — Definition,
- The most common type of car lease, also known as a closed-end lease. The lessee may return the car at the end of the lease term, pay any end-of-lease costs, such as the disposition fee, and the lease agreement is over. In a closed-end lease, the lender assumes the risk of predicting the value of the vehicle (its residual value) at the end of the lease's term. Closed-end lease payments are somewhat higher than open-end lease payments.
