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While car leasing may seem confusing at first glance, you can think of it as being similar to a long-term rental. Many drivers prefer leasing over buying thanks to the lower payments and increased flexibility that comes with a Mazda lease. Here at our Mazda finance center at Tumminia Mazda, we make the leasing process simple. These are some lease terms you need to know.

Common Leasing Terms Explained

In order to understand how a car lease works, you’ll need to understand the following terms:

·       Capitalized cost: Also referred to as the cap cost, it is the negotiated selling price of the car plus any additional fees you might want to include in the monthly lease payment. The lower you negotiate the purchase price of a car, the lower your monthly payment will be.

·       Capitalized cost reduction: Your capitalized cost can be reduced by things like a down payment, trade-in allowance, or rebate.

·       Acquisition fee: This is the fee that leasing companies charge to arrange the lease. This fee is non-negotiable.

·       Depreciation: Depreciation makes up the largest part of your lease payment. Some cars depreciation faster than others.

·       Residual: The amount that your car is worth at the end of the lease. The residual value is calculated before you sign the lease. Most leasing companies use the Automotive Leasing Guide to calculate the residual.

·       Money factor: This is a number that can be thought of as being similar to an interest rate.

·       Term: The total length of your lease.

·       Gap insurance: Protects you in case the car is stolen or totaled.

Get your Mazda lease started at Tumminia Mazda today.

Categories: Finance

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