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Taxes assessed on leased and purchased vehicles. States differ in which amounts are taxed and when the taxes are assessed. In a lease, sales/use taxes may be assessed on (1) the base monthly payment, (2) any capitalized cost reduction, and (3) in a few states, the adjusted capitalized cost. In most states, the sales/use tax on the base monthly payment is paid monthly; in some states, however, the tax is due at lease inception. Sales/use taxes on the capitalized cost reduction and the adjusted capitalized cost are usually due at lease inception. If you exercise any purchase option, separate taxes may apply.
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An amount you may be required to pay, usually at the beginning of the lease, that may be used by the lessor or assignee in the event of default or at the end of the lease to offset any amounts you owe under the lease agreement. Any remaining amount may be refunded to you.
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If stated in your lease agreement, a lessor's or assignee's legal right to your property (such as stocks or bonds) that secures payment of your obligation under the lease agreement.
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Disclosures required by Federal Reserve Board Regulation M that must be grouped together and separated from other information in the lease documents. The first page of the sample leasing form shows the disclosures that must be segregated. See also Nonsegregated disclosures.
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(or Mechanical breakdown coverage or Extended warranty) A contract you may purchase to cover such expenses as the repair or replacement of vehicle components and, in some cases, related services such as towing or replacement rental cars. In most cases, service contracts do not cover routine maintenance. Distinguish from Maintenance contract.
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A lease that requires a single payment made in advance rather than periodic payments made over the term of the lease. The single, lump-sum payment should be less than the total amount you would pay were you to make periodic payments over the term of the lease.
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Statements in the lease agreement defining what the lessor or assignee means by normal wear and use and setting the requirements for the vehicle's condition at the end of the lease. Standards may address such items as the minimum amount of tread on the tires at the end of the lease or the type of dents or scratches that are acceptable. These standards must be reasonable.
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Oral or written contractual transfer of your leased vehicle to another person. Such a transfer is usually prohibited without the lessor's or assignee's approval.
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A program or plan in which certain items are subsidized by the manufacturer, the finance company, the lessor, or the assignee.
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