If you are leasing a new car, SUV or truck, there a lot of leasing terms you’ll want to understand. At Cartelligent, we help thousands of clients each year choose the best leasing option for their personal circumstances.

We hope this list of leasing terms will guide you on your way:

Acquisition Fee (or Bank Fee):

A fee charged by the financial institution that is underwriting the lease. You’ll need to pay the acquisition fee as part of your down payment or in your monthly payment. Some lessors will allow you to negotiate the fee.

Buyout Price:

The amount you can purchase the vehicle for at any time during your lease. The buyout price will decline over time and should be specified in your contract. If you need to get out of your lease in the future, you’ll pay the current buyout price.

Cap Cost Reduction:

Anything that reduces the price of the vehicle. For example: you can trade in a vehicle you currently own, make a down payment, or get an applicable rebate from the manufacturer.

Capitalized Cost:

Often called the “cap cost,” this is the vehicle price. You can negotiate the cap price for a leased vehicle, just as if you were buying a new vehicle.

Closed-End Lease:

The vehicle’s value at the end of the lease is fixed at the residual value. This is the amount the vehicle is expected to be worth at the end of the lease.

Disposition Fee:

The fee due at the end of your lease to cover the cost of preparing your leased vehicle for resale.

Due at Signing (Drive off ):

This is how much you’ll pay upfront, including fees, when you sign your contract.

Lease Term:

The amount of time you will lease the vehicle. A lease term is often two or three years, but it can be for a shorter or longer time period. You can negotiate the lease term.

Mileage Cap:

This is the maximum number of miles you can have on the vehicle at the end of your leasing period. The lease will state how much you will need to pay per mile, if you exceed this limit.

Money Factor:

The interest rate you will pay for the lease. This can be converted to the more familiar annual percentage rate by multiplying the money factor by 2400.


The person or entity who is leasing the car.


The company you are leasing the car from. The lessor can be a bank, financing company, or the financing arm of the auto maker. Your leasing contract is with the lessor.

Open-End Lease:

The vehicle’s value at the end of the lease is not fixed. You’ll need to make up any difference between the vehicle’s residual value and fair market value, if its fair market value is higher. (Cartelligent typically negotiates closed-ended leases for our clients)

Residual Value:

The amount the vehicle is expected to be worth at the end of the lease term.

Security Deposit:

The amount of money you will need to pay upfront as security for the leasing company, in case you damage the vehicle, default on your leasing contract, or go over your mileage cap. You’ll get this back at the end of your lease, if you don’t incur additional costs. (Cartelligent clients typically do not pay these)

If you are considering leasing a vehicle and would like some expert assistance, Cartelligent’s local advisers are ready help. We can explain in clear terms how leases work. If you decide that leasing is for you, we’ll talk you through the options, like how long your lease should be and how many miles you’ll need. Then, we’ll negotiate the terms of your lease and make sure you get a great deal.

Cartelligent is an online new car buying and leasing service serving customers all over California. For 20 years, we have helped our customers get a great sales price on the vehicle they want and provided the best possible buying and leasing experience. Our local advisers are ready help you select the right car, SUV or truck for your needs.