Definitions of Leasing Terminology

Additional Collateral:

Assets pledged by the lessee to the lessor, ensuring the performance of the lessee during the lease.

Acquisition Fee:

A fee lessors charge that covers the cost of setting up the lease. This can include GAP insurance, contingent liability insurance and residual value insurance.

Advance Rentals:

The amount of money paid up front to begin the lease.

Capitalized Cost (Cap Cost):

The financial amount of the lease and includes the equipment selling price, lease fees, sales tax or other added items.

Credit Score:

Part of your credit report and is used by lessors to determine your rate of interest. The higher the score the better rate.

Depreciation:

The decrease in value of the equipment over a specific time period.

Extended Warranty:

Can also be called a service contract. If available it picks up where the new warranty leaves off.

Gap Insurance:

If the equipment is stolen or damaged, this insurance covers the difference between the lease payoff and the amount your (the lessee's) insurance pays.

Guarantees:

Promises signed by the owners of the business, other companies, or other individuals, promising that payment will be made.

Lease Payoff:

The amount required to get out of your lease early. This may include extra fees for breaking the lease early.

Lease Term:

The period of time covered by the lease.

Lessee:

The person holding the lease.

Lessor:

The group granting the lease (ie: Omni Leasing).

Manufacturer:

The company that makes the equipment being leased.

Market Value:

How much an idividual or a dealer is will to purchase your equipment in a retail enviroment.

Monthly Interest:

A monthly finance charge and part of your monthly payment.

Monthly Rental:

The amount of the monthly payment made by the lessee to the lessor.

Payments:

The amount paid at regular intervals, such as monthly, by the lessee for the use of the equipment.

Purchase Amount:

The amount to be paid at the end of the lease if the lessee wishes to buy the equipment from the lessor.

Remarketing Company:

A third party company that handles the disposition of the leased equpment.

Residual Value:

An estimation of how much the equipment will be worth at the end of the lease.

Security Deposit:

An amount of money paid to secure payment, which is held by the lessor. Some companies used the first and last month's payments as a security deposit.

Vendor:

The company that sells the equipment being leased.