Leasing Terms You Need to Be Familiar With

When you begin to look into the process of leasing, you’ll probably hear some unfamiliar terms.

Learning some of the leasing lingo can take a little of the confusion out of the process.

Give yourself a leg-up by getting acquainted with some of these words associated with leasing.

That’s you! The person who’s leasing the vehicle.

The party who is leasing the vehicle to you. Even though you may be working through a dealership, the lessor is usually the bank or the financial department of a vehicle manufacturer.

The length of the lease agreement. Most lease terms are for two or three years.

Security Deposit
This is usually the amount of one month’s payment, though can be more in order to reduce the amount of your monthly payments by getting you a lower interest rate.

Allowable Mileage
You’re only allowed to drive your leased vehicle a certain amount of miles over the term. This is your allowable mileage. If you go over that amount, you’ll usually be charged overage fees.

The amount by which a vehicle loses value. In terms of a lease, it’s the difference between the cost of the brand new vehicle and the car’s value at the end of the lease.

Drive-Off Fees
This is the amount of money you must provide in order to start the lease. This usually includes BMV fees, leasing fees, and a security deposit.

Payoff Amount
The amount of money you would need to pay in order to own the car. It’s also commonly referred to as the buyout amount.

Residual Value
The leasing company makes a prediction as to what the vehicle will be worth when the lease is up. It’s important to know because it affects your monthly payment. For example, a high residual value will result in a lower monthly payment.

Having a handle on these common lease terms will be helpful as you delve into the world of leasing!

Another helpful hint is to come and see us at Park Acura! We’d be happy to answer your questions and help you find the perfect vehicle!
Categories: New Inventory, People, Social
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