Reviews-at-a-Glance
Read our impressive 2008 Seville STS review, a fun, futuristic time-machine.
Whether you have seen the latest 2008 Chevy pictures, Chevy reviews, or SUV specs, one thing remains clear, Chevrolet is the undisputed American car and truck manufacturer.
Lease Glossary A - K | L - Z | Leasing Tips | Federal Lease Form
A payment received after the specified due date. In most cases, after any grace period, a late payment triggers a late charge.
Lease
A contract between a lessor (you) and a lessee (lease company or dealer) for the use of a vehicle or other property, subject to stated terms and limitations, for a specified period and at a specified payment.
Lease balance (adjusted lease balance)
The unpaid portion of the adjusted capitalized cost of the lease. The lease balance is reduced as you make your monthly payments, usually by use of a standard methodology such as the constant yield (actuarial) method. The lease balance is often a primary component of the early termination payoff amount.
Lease charge
See Rent or rent charge.
Lease extension
Continuation of a lease agreement beyond the original term, often one month at a time. There may be a charge for extending the lease. If the extension continues beyond six months, new lease disclosures must be provided.
Lease factor
See Money factor.
Lease payments
The number of payments in the lease agreement. Generally, the number of payments and the number of months in the lease term are the same. However, there are some leases in which the numbers may be different, such as a single-payment lease that would disclose "1" as the number of payments and may disclose "24 months" as the lease term. (see amortization schedule to see REAL figures)
Lease rate
A percentage used by some lessors or assignees to describe the rent charge portion of your monthly payment. However, no federal standard exists for calculating the lease rate. Any rates or factors used in lease calculations do not have to be disclosed under federal law. If a lease rate is given as a percentage in an advertisement or on any lease form, the ad or form must also state, "This percentage may not measure the overall cost of financing this lease." Some states may require lease rate disclosure using the state's definition. (see your States Attorney General).
Lease term
The period of time for which a lease agreement is written.
State laws that provide remedies to consumers for vehicles that repeatedly fail to meet certain standards of quality and performance. Lemon laws vary by state and may not cover leased vehicles.
Lessee
The party to whom the vehicle is leased. In a consumer lease, the lessee is you, the consumer. The lessee is required to make payments and to meet other obligations specified in the lease agreement.
The person or organization that regularly leases, offers to lease, or arranges for the lease of the vehicle. See Assignee and Broker.
Luxury car tax
A federal excise tax assessed on vehicles with a gross vehicle weight of less than 6,000 pounds and a value exceeding a threshold amount, which is adjusted periodically for inflation.
Care for the vehicle required by the lease agreement. Maintenance may include manufacturer-recommended servicing and any repairs needed to keep the vehicle in good operating condition.
Maintenance contract
A contract that you may purchase to cover some or all of the vehicle maintenance and servicing. Distinguish from Service contract.
Maintenance lease
A lease agreement in which some or all of the vehicle maintenance and servicing is the responsibility of the lessor or assignee.
Mechanical breakdown coverage
See Service contract.
Mileage allowance or mileage limitation
The fixed mileage limit for the lease term. If you exceed this limit, you may have to pay an excess mileage charge.
Late charge
A fee charged for a past-due payment. This charge is usually either a percentage of the lease payment or a fixed dollar amount.
Model lease forms
Sample disclosure forms developed by the Federal Reserve Board. You should receive a similar form before becoming obligated on the lease. View the sample model lease forms with explanations of the disclosures.
A number, often given as a decimal, used by some lessors or assignees to determine the rent charge portion of your monthly payment. This number is not a lease rate and cannot be converted to a lease rate by moving the decimal point.
Monthly payment
This term may refer to one of two required federal disclosures. See Base monthly payment and Total monthly payment.
Monthly sales/use tax
The state and local taxes that you must pay monthly when you lease a vehicle. These payments, if any, are added to your base monthly payment and paid as part of your total monthly payment.
Manufacturer's suggested retail price, sometimes called the sticker price.
See Adjusted capitalized cost.
Disclosures required by the Federal Reserve Board's Regulation M that may be presented in any order and may appear anywhere in the lease documents except with the segregated disclosures.
A lease agreement in which the amount you owe at the end of the lease term is based on the difference between the residual value of the leased property and its realized value. Your lease agreement may provide for a refund of any excess if the realized value is greater than the residual value. In an open-end consumer lease, assuming you have met the mileage and wear standards, the residual value is considered unreasonable if it exceeds the realized value by more than 3 times the base monthly payment (sometimes called the "three-payment rule"). If you believe the amount owed at the end of the lease term is unreasonable and refuse to pay, the lessor or assignee may attempt to prove that the residual value was reasonable when it was set at the beginning of the lease. However, if you cannot reach a settlement with the lessor or assignee, you cannot be forced to pay the excess amount unless the lessor or assignee brings a successful court action and pays your reasonable attorney's fees. Distinguish from Closed-end lease.
Option to purchase
See Purchase option.
See Early termination payoff.
Personal property tax (or Ad valorem tax)
A tax on personal property. State laws govern whether personal property taxes apply to a leased vehicle; your lease agreement governs whether you or the lessor or assignee will pay these taxes.
Prior credit balance (negative equity or negative trade-in 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.
Prior lease balance
The portion of the gross capitalized cost representing the balance due under a previous lease agreement after crediting the value of the previously leased vehicle.
Your right to buy the vehicle you have leased, before or at the end of the lease term, according to terms specified in the lease agreement. Your lease agreement may or may not include a purchase option.
Purchase-option fee
An amount, in addition to the purchase price, you may have to pay to exercise any purchase option in your lease agreement.
(1) The price received by the lessor or assignee for the leased vehicle at disposition, (2) the highest offer for the leased vehicle at disposition, or (3) the fair market value of the leased vehicle at termination. The realized value may be either the wholesale or the retail value specified in the lease agreement.
Reasonableness standard
The requirement of the Consumer Leasing Act that charges for delinquency, default, or early termination be reasonable in light of the lessor's or assignee's (1) anticipated or actual harm caused by such delinquency, default, or early termination; (2) difficulties in proving loss; and (3) inconvenience in obtaining a remedy.
Rebate
An amount that may be offered by a manufacturer, dealer, lessor, or assignee that may be paid to you separately or credited to your lease agreement.
Reconditioning
The process of preparing a vehicle for resale or re-lease if you return it.
Reconditioning reserve
An amount that you may pay at the beginning of the lease that may be used by the lessor or assignee to offset any amounts you may owe at the end of the lease term for excessive wear and use and excess mileage. Any remaining amount may be refunded to you.
A fee charged by a state motor vehicle department to register a vehicle and authorize its use on the public roadways.
The regulation issued by the Federal Reserve Board that implements the Consumer Leasing Act.
The portion of your base monthly payment that is not depreciation or any amortized amounts. This charge is similar to interest on a loan. (see amortization schedule)
The end-of-term value of the vehicle established at the beginning of the lease and used in calculating your base monthly payment. The residual value is deducted from the adjusted capitalized cost to determine the depreciation and any amortized amounts. It is an estimate that may be determined, in part, by using residual value guidebooks. The residual value may be higher or lower than the realized value at the scheduled end of the lease.
Residual value guidebooks
Publications used, in part, by some lessors and assignees to establish vehicle residual values. Different guidebooks are more popular in different regions of the United States and with different lessors and assignees.
Sales/use taxes, which vary from state to state, are assessed on both leased and purchased vehicles. There are often differences in what amounts are taxed and when the taxes are assessed. In a lease, sales/use taxes may be assessed on (1) the base monthly payment; (2) any capitalized cost reduction; and (3) in a few states, the adjusted capitalized cost. In most states, the sales/use tax on the base monthly payment is paid monthly; in some states, however, the tax is due at lease inception. Sales/use taxes on the capitalized cost reduction and the adjusted capitalized cost are usually due at lease inception. If you exercise any purchase option, separate taxes may apply.
Security deposit
An amount you may be required to pay, usually at the beginning of the lease, that may be used by the lessor or assignee in the event of default or at the end of the lease to offset any amounts you owe under the lease agreement. Any remaining amount may be refunded to you.
Security interest
If stated in your lease agreement, a lessor's or assignee's legal right to your property (such as stocks or bonds) that secures payment of your obligation under the lease agreement.
Disclosures required by Federal Reserve Board's Regulation M that must be grouped together and separated from other information in the lease documents. The first page of the sample lease form shows the disclosures that must be segregated. See also Nonsegregated disclosures.
Service contract (mechanical breakdown protection or extended warranty)
A contract that you may purchase to cover expenses such as the repair or replacement of vehicle components and that may pay for related services such as towing or replacement rental cars. In most cases, service contracts do not cover routine maintenance. Distinguish from Maintenance contract.
Single-payment lease
A lease that requires a single payment made in advance rather than periodic payments made over the term of the lease. This lump-sum payment should be less than the total amount you would pay were you to make periodic payments over the term of the lease.
Standards for wear and use
Statements in the lease agreement defining what the lessor or assignee means by normal wear and use and setting the requirements for the vehicle's condition at the end of the lease. Standards may address such items as the minimum amount of tread on the tires at the end of the lease or the type of dents or scratches that are acceptable. These standards must be reasonable.
Sublease
Oral or written contractual transfer of your right to use the leased vehicle to another person. Such a transfer is usually prohibited without the lessor's or assignee's approval.
Subvention
A program or plan in which certain items are subsidized by the manufacturer, the finance company, the lessor, or the assignee.
See Disposition fee or disposal fee.
Three-payment rule
See Open-end lease.
Time value of money
The value derived from the use of money over time as a result of investment and reinvestment. This term may refer to either present value or future value calculations. The present value is the value today of an amount that would exist in the future with a stated investment rate called the discount rate. For example, with a 10% annual discount rate, the present value today of $110 one year from now is $100. Future value is the value in the future of a known amount today with a stated investment rate. For example, with a 10% annual investment rate, the future value in one year of $100 today is $110. In either case, the interest rate used reflects the lost opportunities for return from alternative investments.
Title
Legal document that identifies the owner of the vehicle. The lessor or assignee, not you, holds title to the leased vehicle.
The sum of the capitalized cost reduction, the total of base monthly payments, and other charges due under the lease agreement. The total contractual obligation excludes any security deposit as well as sales taxes and any other fees and taxes paid to a third party. If the total contractual obligation exceeds $25,000, the Consumer Leasing Act does not apply.
The base monthly payment plus monthly sales or use taxes and any other monthly charges.
Total of payments
The sum of the periodic payments, the end-of-term disposition fee, any other charges, and all amounts due at lease signing or delivery, minus refundable amounts such as a security deposit, and any monthly payments included in the amount due at lease signing or delivery.
Trade-in
The net value of your vehicle credited toward the purchase or lease of another vehicle. If you own the vehicle being traded-in, you sell it to the dealer or lessor. If you a
Publications that report current wholesale and/or retail prices of vehicles. Wholesale values generally are determined from factors including auto auction prices, other wholesale transactions, and regional demand. Prices are listed according to year, make, model, options, mileage, and condition of the vehicle. Retail prices are generally determined by factors including dealership retail sales prices, other retail transactions, and regional demand.
Used-vehicle leasing
Leasing of previously owned or driven vehicles.
Walk-away lease: see Closed-end lease
A guarantee that the vehicle will function and perform as specified. A warranty usually covers specified mechanical problems during a specified period of time or number of miles. (see warranty section)