- A typical lease will require no down-payment. This means you use the capital of the lessor.
- All vehicles depreciate over time. A lease recognizes this fact up front, and the payment is calculated on the difference between the vehicle’s original value and its expected value at the end of the lease term. It’s like getting your trade-in value up-front. The benefit is a lower monthly payment, based on your driving needs.
- With no major cash outlay and lower monthly payments, you will have more cash available to pay off other bills or to put into savings. You can free up your lines of credit for better application of interest earnings or profit making.
- If you have a fixed budget for your monthly car payment, a lease may allow you to drive a more equipped or expensive vehicle than other financing alternatives.
- A lessor can guide you through your selection process, emphasizing vehicle type, resale values, and options available, as well as explaining types and terms of leases available, all with consideration to your driving and financial needs.
- With a lease, there is no need to arrange bank financing. Also, a full-service leasing company, such as AADA, can offer you vehicle comparisons and quotes on many makes and models. One-stop shopping can save you a lot of time.
- Leasing allows you to recycle your leased vehicle every two to five years. This is before expensive maintenance costs occur. Be sure to choose the term that best reflects your anticipated use of the vehicle to maximize this advantage.
- Trying to determine the value of a used car or finding a buyer for it, when you want to change vehicles, can be difficult; not with a lease. At lease end, you can simply return your car. Of course the option to purchase is always available.
- You will pre-determine your payment per month for the full term of your lease. Should you select a lease with a “buy-back” clause, your purchase price will also be pre-determined; this has the effect of allowing you to buy the vehicle at lease-end with inflated dollars.
- Many people who claim expenses for a vehicle prefer the simple record-keeping that leases provide. No need to calculate annual depreciation and monthly interest….it’s all in your monthly payment.
- Pay HST on the monthly payment only. You are not paying taxes on the total price of the vehicle, only on what you use.
- Less customer negotiations. Many people do not like to haggle over price. AADA will provide that peace of mind.
An agreement under which the vehicle owner (the lessor) permits it’s use by a customer(s) (the lessee) for an agreed amount & period of time (the term).
The owner of the vehicle being leased.
The user of the vehicle being leased.
An agreement where the lessee has the financial responsibility to the lessor for all monthly payments, the residual value or buyout value. The buyout represents the un-financed portion of the lease. At lease end, the lessee normally can buy the vehicle or ask the lessor to sell it. In both cases, any amount of the sale in excess of the buyout is the lessee’s. Any shortfall must be made up by the lessee.
A lease that allows the lessee to return the vehicle at the end of the lease term with no further financial obligation, assuming that the lessee has complied with all of the terms of the lease. The lessee may be responsible for a disposition fee, if it is part of the lease agreement. There may be additional charges according to the terms of the lease for any excess kilometers or excess wear. The lessee is not responsible for any difference between the residual value, as stated in the lease, and the actual value of the vehicle at the end of the lease.
Low Kilometer Lease
A lease designed for people who drive less than 20,000 kms per year, thereby providing additional savings per month over a regular lease.
Sub – Lease
The ability to transfer a leased vehicle to a (new party) who qualifies under the leasing companies guidelines and credit conditions.
The ability to extend a lease for various periods of time with certain lessor criteria involved.
The length of time covered by the lease agreement.
Annual Percentage Rate
The interest rate used in the calculation of the monthly lease payment.
Commonly referred to as the Cap Cost, which is the lease price of the vehicle.
The total of any cash payment, trade-in allowance or rebate used to reduce the gross capitalized cost. The capitalized reduction is subtracted from the gross capitalized cost to get the adjusted capitalized cost.
An estimate of the vehicle’s worth at lease-end as determined by the lessor for the purpose of calculating the monthly lease payment. Residual values vary by term and for different make and models depending on predicted rates of depreciation.
Gap Protection Coverage
A type of insurance coverage that covers the difference between the payoff of the lease and the amount covered by other insurance coverage, when a vehicle is written off or stolen. You are not responsible for any additional charges or shortfall other than your insurance deductible providing that you have fulfilled all of your contract obligations prior to the accident or theft of the leased vehicle.
The lessee’s right to purchase the leased vehicle, either at the end of the lease or during the lease term, as specified in the lease agreement based on the standing of your account.
A refundable deposit that you pay at the time of lease signing. Interest is not paid on a security deposit. It may be used to pay excess kilometer charges or other fees at the end of the lease term.
Kilometer Allowance or Kilometer Limit
The total amount of kilometers the vehicle may be driven over the term of the lease, without incurring liability for additional kilometer charges.
Excess Kilometer Charge
A fee charged for each kilometer in excess of the predetermined kilometers stipulated in the lease agreement.
Depreciation of Vehicle
The estimated value of the vehicle at the end of the lease, which will reduce due to time, kilometers, and condition of vehicle on return of vehicle at the end of the lease.
A fee charged by the lessor to cover the administrative costs of preparing, approving and administrating the lease.
Adjusted Capitalized Cost
The amount capitalized at the beginning of the lease, after adding any fees or other charges to be included, and subtracting any capitalized cost reductions, such as rebates, trade-in allowances and cash reductions.
The manufacturer’s suggested retail price.
Ending a lease before the scheduled termination date. The lessee will typically be required to pay an early termination charge as described in the lease agreement.
Early Termination Charge
The fee charged to a lessee in the event of an early termination of a lease. Penalties vary from lease to lease and the method of calculation is determined at lease inception and explained in the lease agreement.
Early Termination Payoff
The total amount the lessee owes if the lease is terminated early, before subtracting any credit for the value of the vehicle. The payoff is calculated as described in the lease agreement.
Excess Wear & Use
A section of the lease agreement that establishes you, the lessee, as responsible for the expense to repair or replace vehicle parts, which are worn or damaged beyond what is considered normal. Some examples of excess wear and use include: broken or missing parts, torn or stained fabric, broken glass, etc.