Open Site - Business: Retail Trade: Automotive: Leasing: Terminology: C

Top: Business: Retail Trade: Automotive: Leasing: Terminology: C

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Capitalized cost

Shortened term for either gross capitalized cost or adjusted capitalized cost. Disclosure of both types of costs is required under federal law. Some states require that the term "capitalized cost" be used in state lease disclosures. See Gross capitalized cost and Adjusted capitalized cost.

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Capitalized cost reduction

(cap cost reduction) The sum of any down payment, net trade-in allowance, and rebate used to reduce the gross capitalized cost. The cap cost reduction is subtracted from the gross cap cost to get the adjusted cap cost.

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Captive finance company

A finance company related to a particular automobile manufacturer or distributor.

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Closed-end lease

(or Walk-away lease) A lease in which you are not responsible for the difference if the actual value of the vehicle at the scheduled end of the lease is less than the residual value (though you may be responsible for excessive wear and excess mileage charges and for other lease requirements). Distinguish from Open-end lease.

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Consumer lease

A lease of personal property to an individual to be used primarily for personal, family, or household purposes for a period of more than 4 months and with a total contractual obligation of no more than $25,000. A lease meeting all these criteria is covered by the Consumer Leasing Act and Federal Reserve Board Regulation M. If any one of these criteria is not met, for example, if the leased property is used primarily for business purposes or if the total contractual obligation exceeds $25,000, the Consumer Leasing Act and Regulation M do not apply. See Total contractual obligation.

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Consumer Leasing Act

A 1976 amendment to the federal Truth in Lending Act that requires disclosure of the cost and terms of consumer leases and also places substantive restrictions on consumer leases. See Consumer lease.

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Constant Yield method

(or Actuarial method) The method of earning rent charges whereby the rent charge each month is proportional to the remaining lease balance. Under this method, the lessor or assignee earns rent charges at an equal rate over the lease term (this method is the way the lender earns interest in most first mortgages).

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Consummation

Generally, the time at which you and the lessor sign the lease agreement.