Terms to Know for VEHICLE LEASE AGREEMENT

If you are planning to own a van sans the hassles of any long-term commitment, considering to lease a VEHICLE can be a good option. The VEHICLE leasing agencies are equipped with lines of highly advanced vehicles hailing from the house of some top-notch manufacturers. The best thing about leasing is that you pay half of the buying price, whereby investing the saved money into a productive venture for your business. While Motor VEHICLE LEASE AGREEMENT provides a few advantages, there can be potential drawbacks too. And if you are considering to make a deal with a vehicle leasing agency you should watch out for the drawbacks.

⇒Acquisition Fee: An administrative charge levied by the leasing company for processing a lease. This fee is typically NOT negotiable and can have a significant bearing on the overall cost of the lease.

⇒Base Interest Rate: This is the cost of leasing and using a vehicle and is measured by the interest paid over the lease term.

⇒Buy at end-of-term interest rate: This is the net interest rate for the lease if the lessee, at the end of the lease term, purchases the vehicle at the end-of-lease purchase price.

⇒Capitalized Cost: This is the total purchase price of the vehicle. The price includes the cost of all extras such as vehicle options, extended warranties, life insurance, and rustproofing. The capitalized cost equals the amount you would pay for the vehicle if the vehicle were being purchased.

⇒Capitalized Cost Reduction: A capital cost reduction is a down payment, in the form of cash or trade-in, that is applied to the final purchase price of the vehicle reducing the monthly lease payment.

⇒Closed End Lease: Leases in which the lessee's financial obligation rests only with the negotiated monthly lease payment. Since the residual value of the vehicle is stated in the lease contract, the lessee is not financially responsible if the actual value of the vehicle is less than the stated residual value. The lessee need only return the vehicle at the end of the lease term with no further obligation.

⇒Dealer Participation: A rebate or discount, contributed by the dealer, reducing the final purchase price of the vehicle.

⇒Depreciation: The decrease in value of a vehicle over time. Depreciation in automobile leasing is the difference in value between the cost of a new vehicle and the value of the vehicle at the end of the lease term.

⇒Disposition Fee: A fee charged by the lessor at the end of a lease to ready the car for sale. The lessor may apply this fee against the deposit made by the lessee at the beginning of the lease term.

⇒Down Payment: A sum of money paid at the beginning of a lease contract, usually at the time of signing, that is applied to the final purchase price. In leasing, the down payment is referred to as the capitalized cost reduction. Typically, the larger the down payment, the smaller the lease payment.

⇒Early Termination Fee: A penalty paid by the lessee for terminating a lease contract early. A lessee pays for the depreciation of a vehicle in equal monthly payments. Since a vehicle's depreciation is highest in the first months of a lease, terminating a lease early results in the lessee using more of the vehicle's value than what they've paid for subjecting the lessee to penalty.

⇒End-of-Lease Purchase Price: Also known as the residual value. This is the price at which the lessee may purchase the vehicle at the end of the lease term.

⇒Excess Wear & Tear: Wear and tear beyond what is deemed acceptable by the leasing company. It is the responsibility of the lessee to take reasonable care of the car and to ensure it is returned at the end of the lease term in good condition. Bald tires, body dents, and engine trouble due to neglect could subject the lessee to repair and replacement charges.

⇒Gap Insurance: The name given to a type of insurance coverage that covers the difference between the actual cash value of the leased vehicle and what is still owed on the lease contract. If a leased vehicle is destroyed in an accident or stolen, gap insurance coverage protects the lessee against additional losses due to "gaps" between the insurance settlement and the lessee's financial obligations set out in the lease contract.

⇒Independent Lessor: These are non-traditional lessors, usually an individual business, that can structure and write a lease for most makes and models of vehicles. The terms and conditions of the lease agreement can be customized to accommodate different lease and mileage conditions.

⇒Lease Extension: This is the continuation of a lease, beyond the original lease contract. Payments are continued on a month-by-month basis at the same sum negotiated at the beginning of the lease term.

⇒Lease Term: This is the length of the Lease Assignment Agreement. Most vehicles can be leased for 12, 24, 36, 48, and 60 month lease terms. The monthly payment of a lease will vary depending on the length of the lease term.

⇒Lessee: Name assigned to a person or party who signs a lease and agrees to assume responsibility for a vehicle and the lease payments.

⇒Lessor: Name assigned to a person or party that owns the vehicle and agrees to lease it to the lessee.

⇒Mileage Allowance: Lease agreements establish a maximum mileage allowance that the car may be driven over the life of the lease. The agreement will also specify the cost per mile or kilometer the car is driven over and above the allowance that is due and payable at the end of the lease term.

⇒Money Factor: This is a number used to calculate the base interest rate of a lease. To arrive at a base interest rate, leasing companies will multiply a money factor by 2400. The money factor of a lease is known by the leasing and sales consultant at the dealership and is used to calculate the cost of money in the same fashion as an interest rate does. The lower the money factor, the lower the monthly lease payments.

⇒Monthly Payment: A payment made on a specified date each and every month as specified in the lease contract. Monthly lease payments calculated on a lease contract typically include all applicable taxes.

⇒Net Interest Rate: This is the total interest rate for a lease and represents the true cost of the lease. The lower the net interest rate, the lower the cost of the lease.

⇒Open-End Lease: Leases in which the lessee's financial obligation may exceed the negotiated monthly lease payment. In an open-end lease the residual value is set at the beginning of the lease term. The lessee is financially responsible if the actual value of the vehicle is less than the stated residual value.

⇒Purchase Option: Option extended to the lessee, at the end of a lease contract, to purchase the vehicle at the pre-determined purchase price. The pre-determined purchase price is normally the stated residual value in the lease contract.

⇒Residual Penalty: This is the penalty a lessee pays if the end-of-lease purchase price is greater than the expected value of the vehicle at the end of the lease term.

⇒Residual Value: This is the expected or pre-determined value of a leased vehicle at the end of the lease contract. The stated residual value on a lease contract is normally the buyout price at the end of a lease term. The residual value also determines whether the lessee should purchase the vehicle at the end of the lease term. If the residual value is less than the actual market value it would be advantageous for the lessee to buy the vehicle and sell it to a third party.

⇒Security Deposit: This is a sum of money, paid up front, as security for excess wear and tear on the leased vehicle. The amount is refunded if the vehicle is returned in good condition. In some cases, the deposit may be applied against the final monthly payment.

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Prepare your lease assignment agreement with legal document creator

What is in lease agreement? That is an excellent question, and if you have never seen a lease agreement don't worry, you are not alone. For those just now moving for new job, change of business or sell their business to the third party there is no time like now to become familiar with a lease agreement.To this end we will walk through sample a lease agreement and highlight the major contents found within the lease-assignment-agreement. Thus it is important that you understand how a Lease Transfer works and what you should expect to be included in the lease agreement.

If you are a tenant or Lessee, your lease agreement probably contains a clause prohibiting you from letting someone else take over the lease without the landlord's consent. This is to protect the landlord from suddenly having new tenants.tenants who may or may not make timely rental payments.

If you go ahead and move someone else in to your rented property without the consent of the landlord or Lessor you will more than likely be in breach of contract and could end up in court. If in doubt, read your lease. But even if the lease allows such a transfer, it is in your best interests to obtain your landlord's signature on an LEASE AMENDMENT by Lessee with Consent of Lessor.

WHY? Even if your lease allows you to let other people move into the property without your landlord's consent which is doubtful, you will retain full responsibility for rent payments and property condition. If the new people don't pay, guess what? If the new people trash the house, causing thousands of dollars of damage, guess what? The landlord will come after YOU. You, after all, are the one who signed the lease.

The only safe and secure answer is to use the form: Assignment of Lease by Lessee with Consent of Lessor. You will no doubt need to provide your landlord with the same kind of information about the incoming party that he or she required of you.

To make it easier to follow along and truly understand the contents of a lease agreement it is advised that you follow the sample lease agreement. This is a simplified example of a lease agreement offered.

Party to the Lease-- The first part of a lease agreement will almost always state the two parties that are involved in the binding agreement. Normally these two parties are referred to as the Landlord and the Tenant.

Property-- Of course, the lease agreement must specifically state the location of the property that is being provided by the Landlord and leased to the tenant. As the example shows, there will usually be a spot for the mailing address of the location. This section also includes a provision to state any and all furniture and appliances that are being included in the lease agreement.

Rent-- The RENTAL/ LEASE AGREEMENT would be severely lacking if it didn't includ terms for the monthly payment as well as the date on which the payment is due.

Term-- The term of the lease agreement refers to the period the property will be occupied and paid for by the tenant. Typically this will include wording that states the term starts on Jan 1, 2XXX and ends on Dec 31, 2XXX. Commonly this section of the lease agreement includes a lease option to extend the period of occupancy. The tenant's lease option might allow him/her to extend the lease another six months.

Utilities/Services-- The lease agreement should outline who pays for what. Some Landlords will pay for everything, while others will make the tenant foot the actual costs for utilities and services.

Deposit-- Most landlords will require a deposit upon signing the lease agreement equaling one months rent. This provides the Landlord some insurance should you try to skip out on your last months rent or damage the property. However, if you leave the apartment in good condition and your account is paid in full, then you should receive most if not all of your deposit back in the form of a check via the mail a few weeks after moving out.

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