Car leasing glossary

• Acquisition Fee — An acquisition fee is a one-time charge to open a lease, commonly $595 to $1,095 by brand. Confirmed Toyota, Ford, GM, and Porsche figures inside.
• Cap Cost Reduction — Cap cost reduction is cash, a trade-in, or an incentive that lowers a lease's capitalized cost. A $1,500 example shows the real payment math.
• Capitalized Cost — Capitalized cost has 2 versions: gross (price plus rolled-in fees) and adjusted (minus reductions). A $650-fee, $1,500-reduction example shows both.
• Captive Lender — A captive lender is the manufacturer's finance arm, like Toyota Financial Services, that sets the money factor, residual, and fees from $595 to $1,095.
• Disposition Fee — A disposition fee is charged when you return a leased car, confirmed at $350 to $495 by brand. Most captives waive it if you buy the car or re-lease.
• Due at Signing — Due at signing bundles the first payment, an acquisition fee, and more. A "zero down" lease can still total $1,048 or more before doc fees and title.
• Early Termination Fee — An early termination fee equals the remaining lease balance minus the car's realized value. Regulation M requires disclosure; one example totals $1,505.
• Excess Wear and Use — Excess wear and use is damage beyond a captive's own published thresholds, not a guess. Honda bills dents over 1.5 inches; Ford allows up to 4.
• GAP Coverage (Lease) — GAP coverage closes a lease's total-loss shortfall. Honda includes it in every lease with a $1,500 waiver; many other captives require buying it.
• Lease Buyout Price — The lease buyout price is what you owe to own the car at the scheduled end of the term: residual value plus a fee and tax, totaling $19,133 on one example.
• Lease-End Equity — Lease-end equity is the gap between a car's market value and its buyout price. A hypothetical $30,000 lease example works out to $4,432.00.
• Money Factor — A lease's interest rate written as a decimal. Multiply by 2,400 for the APR: a 0.00275 money factor is about 6.6%. The rent charge formula behind it, worked.
• Money Factor Markup — A dealer can mark up a lease's money factor above the buy rate and keep the spread. A $31,000 hypothetical example: $469.99 vs $494.56 a month.
• MSRP vs Selling Price — MSRP sets residual value; selling price sets the depreciation charge. A worked $35,000 example shows negotiating price never moves the $19,250 residual.
• Multiple Security Deposits (MSDs) — Multiple security deposits (MSDs) are refundable deposit units that buy down a lease's money factor. A worked example shows $423 saved.
• Negative Equity (Lease) — Negative equity is a trade-in's loan payoff exceeding its value. Rolled into a $31,500 lease, $2,500 raises the payment from $445.03 to $520.22.
• One-Pay Lease — A one-pay lease trades monthly payments for a discounted money factor. A $32,500 example saves $1,419, but prepaying raises total-loss risk without GAP.
• Payoff Quote — A payoff quote is what you owe to end a lease early: the lease-end buyout price plus remaining payments. Worked on a hypothetical $26,900 lease.
• Post-Transfer Liability — Post-transfer liability is whether you stay on the hook after a lease transfer. None of 4 captives checked publish a clear release policy for it.
• Pull-Ahead (Lease) — A lease pull-ahead is a captive's episodic, targeted invite to end a lease early, not 1 of the 3 standard lease-end choices you can request anytime.
• Rent Charge — The rent charge is a lease's interest cost: (adjusted cap cost + residual value) x money factor. Computed here at $151.75 a month on $48,950.
• Residual Value — Residual value is a car's predicted worth at lease end, set at signing. On a hypothetical $28,000 lease, a 58% residual works out to $16,240.