Lease

Definition

• A written agreement between a property owner and a tenant. This agreement allows the tenant to use the property in exchange for rent, usually for a specified period of time. Vehicle leases are similar to leasing property because it is also a written agreement that allows the customer to use a vehicle in exchange for payments over a specified period of time.

Synonyms
lease agreement, leasing

Acronyms
lse

Related Terms and Acronyms

• Amount Due at Lease Signing — Definition,
  • The total amount due before the consumer can take delivery of a leased vehicle. It can include any security deposit, title fee, capitalized cost reduction, monthly payments paid at signing and registration fees.
• Cancellation Clause — Definition,
  • A provision in a lease or other contract that spells out under what conditions the parties can call off the deal.
• Capitalized Cost — Definition,
  • A leasing term that refers to the price of the car. The lower the capitalized cost, the lower the monthly lease payment. The cap cost is negotiable and can be reduced by a cash down payment, trade-in or a manufacturer's rebate; it can be increased by the loan acquisition fee or costs left over from a previous lease.
• 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.
• Early Termination Charge — Definition,
  • Charges that the leasee must pay if the car is turned in early before the term of the lease is over.
• 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.
• Fixed Expenses (FE) — Acronym,
  • Fixed business costs that do not change regardless of business volume, such as property rental, insurance payments, utilities, etc.
• Ground Rent — Definition,
  • Amount a leaseholder pays periodically for use of land only.
• Landlord — Definition,
  • One who rents or leases his or her property to another person or a business.
• Lease Extension — Definition,
  • The continuation of an existing lease, at the original monthly payment, usually on a month-by-month basis.
• Lease Option — Definition,
  • A written agreement in which an owner allows an individual to use a property in exchange for rent, and also gives that individual the right to buy the property for a specified price within a specified period
• Leasehold Mortgage — Definition, Important,
  • A mortgage given by a lessee on the security of his leasehold interests in the land.
• Lessee — Definition,
  • The person who signs a lease.
• Lessor — Definition,
  • The person who grants a lease.
• Mileage Allowance — Definition,
  • The number of miles, specified in a lease, that a car may be driven over the life of the lease.
• Negative-equity Financing — Definition,
  • Financing for new car buyers who owe more on their trade-in than the car is worth.
• Non-owner Occupant — Definition,
  • A borrower who purchases a property for investment or rental purposes and will not occupy the property.
• Open-end Lease — Definition,
  • Sometimes called a finance lease. It usually offers lower payments, but carries a risk for the consumer. Under an open-end lease, the lessee must pay any difference between the residual value of the car as stated in the lease and the fair market value of the car, if lower, at the end of the lease. The lessor pays for the appraisal that sets the value. If the consumer doesn't agree with it, the consumer may pay for a binding, independent appraisal by someone agreed to by both parties.
• Option — Definition,
  • A legal agreement giving someone the right to buy, sell or lease a property or item at specified terms for a specified period.
• Options — Definition,
  • Also known as add-ons. These are features added to the car often by the dealer such as a CD stereo, anti-theft system, detailing and undercoating. Some items are purely decorative, known as "mop and glow," and do not add any value to the car.
• Oral Agreement — Definition,
  • A spoken, unwritten legal agreement, worth the paper it's printed on.
• Passive Activity — Definition,
  • An activity in which a person does not materially participate such as real estate rentals and limited partnerships.
• Rebate — Definition,
  • A manufacturer's reduction on the price of a car as an incentive to buyers. Rebates appeal to people with no credit or less-than-perfect credit who cannot qualify for the lowest-rate loan. A rebate may also appeal to first-time buyers who don't have a lot of cash for a down payment or another car to trade in.
• Rent — Definition,
  • When one party pays another for the use of an asset, service or property.
• Rent Loss Insurance — Definition,
  • Hazard insurance that pays for a loss in rental value or rental income if damage causes the property to become unfit for habitation.
• Rent-to-Own (RTO) — Acronym,
  • An agreement to purchase an asset after a series of rental payments.
• Rental Agreement (RA) — Acronym, Important,
  • A document that states the terms and conditions for tenancy of a dwelling.
• Rental Property (RP) — Acronym, Important,
  • Property that is occupied by rent-paying tenants and not the owner.
• Renter's Insurance — Definition,
  • Insurance that covers renters for liabilities or damages occurring to or within insured property.
• 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.
• Self Employed Person (SEP) — Acronym,
  • A person who runs a trade or business, rather than working as an employee for someone else. You are self-employed if you are a sole proprietor or a partner working in a business. You can be an employee and self-employed at the same time if you have an independent business outside your regular employee hours. To qualify for many business tax exclusions and deductions, the enterprise must make a profit in three of five years. In most cases in order to qualify you must take and average of the last 2-3 years tax assessments.
• Service Contract — Definition,
  • Also known as extended warranty. A contract that covers certain car repairs or problems after the manufacturer's or dealer's warranty expires. Extended warranties are sold by car manufacturers, dealers and independent companies. With a new car, the extended warranty usually must be purchased by the end of the first year of ownership.
• Small- and Medium-sized Enterprises (SMEs) — Abbreviation,
  • Limits banks place on businesses to determine there size.
  ➥ A term widely used by the World Bank and the World Trade Organization (WTO).
• Step Down Lease — Definition,
  • A lease providing for decreases in rental payment at specified dates.
• Step Up Lease — Definition,
  • A lease providing for increases in rental payment at specified dates.
• Sublet — Definition,
  • An arrangement where a tenant leases property to a subtenant.
• Tenant — Definition,
  • One who rents property.
• Up-front Costs — Definition,
  • The costs that must be paid at the time of signing a car lease agreement. These can include the first month's payment, a refundable security deposit, a capitalized cost reduction or down payment, taxes, registration and other fees.
• 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.