Content provided in partnership with

Business Services Industry

What's the word?

Entrepreneur, Dec, 2002 by Jill Amadio

HAVING A HANDLE ON LEASING TERMS BEFORE negotiating begins can make this complex process easier--and help you strike a better bargain.

* Capitalized cost: The price of the vehicle at the beginning of the lease.

* Capitalized reduction: You can opt for lower monthly bills by putting a down payment on leased vehicles, although this eliminates the biggest advantage of leasing, which is the ability to hold on to your cash.

* Closed-end lease: You hand back the vehicle at the end of the lease without owing residual value (also called appraised/resale value), which is a fixed amount stated in the contract. If you need new vehicles every two to three years, you can roll over the lease to the latest model each time.

Most Popular Articles in Business: Research and Markets : Tesco Plc - SWOT Framework Analysis; Do Us a Flavor - Ben & Jerry's Issues a Call for Euphoric New Flavors; eBay made easy: ready to start an eBay business? These 5 simple steps will ...; Katrina's lawsuit surge: a legal battle to force insurers to pay for flood ...; Wal-Mart's newest distribution center opened last month near the southwest ...; More »

* Depreciation: The dollar amount difference between the car's value at the beginning of the lease and at the end.

* Early termination: If you have misjudged the length of time you need the leased vehicles and want to hand them over before the lease expires, you will owe an early-termination penalty (stated in your contract). Determine how long you will need the vehicle before signing a long-term lease.

* Excess wear and tear: If your leased vehicles suffer excessive damage through careless driving habits or lack of routine maintenance, you will be charged for repairs.

* Gap protection: Waives the difference between what your auto insurance will cover and how much is still owed on the vehicle if it is stolen or totaled.

* Mileage allowance: The standard limit is 12,000 to 15,000 miles a year. Any number over that can cost an average of 15 cents a mile. If necessary, gotiate a higher mileage allowance.

* Open-end lease: You have the option of buying the car at its fixed residual value, but if the vehicle is worth less than that amount at the end of the lease, you must pay the difference. Leases, whether closed or open, typically do not include insurance, but may include license and title fees. Some require the first and last month's payments, or a refundable security deposit, at signing.

* Residual value: The appraised value of the car at the end of the lease after depreciation, used to set a sales price if the lessee wishes to purchase the car. The higher the residual value, the lower the monthly payments.

Business Services Industry

What's the word?

Entrepreneur, Dec, 2002 by Jill Amadio

Find Research Guides for:

Find Featured Titles for: Business

Most Popular Articles in Business

Most Popular Publications in Business