The document explains key terms and concepts related to car leasing, including definitions of lease, term, depreciation, and money factor. It also covers additional terms such as adjusted capitalized cost, gap insurance, and lease assumption. Swapalease.com is introduced as the largest vehicle lease marketplace, aiming to connect individuals seeking to exit their leases with those looking for short-term leases.

1. swapalease.com
Lease Terms Explained

2. Paperwork & Sales Jargon
• Leasing a car for the first time can be a
confusing experience if you haven’t
prepared.
• Here, we’ll explain some terms you’re
likely to hear from the dealer and read on
the leasing paperwork.

3. The Most Important
Let’s start with the lease itself and the major
parts that comprise it.
• Lease - An agreement that allows the lessee
to drive a car for the term of the lease, but
ownership of the car stays with the leasing
company. The lessee typically never pays for
the full value of the car, so a lease is usually
less expensive than a car loan. Repairs,
maintenance, and insurance are usually
treated separately from lease payments.

4. Important Lease Terms
• Term – The duration of the lease.
Common terms include 24, 36, or more
months.
• Depreciation – An asset's decline in value
over the course of its useful life. In your
monthly lease payment, you are paying for
the depreciation of the vehicle that occurs
while you’re using it.

5. Important Lease Terms
• Capitalized (Cap) Cost – The purchase
price of the vehicle.
• Residual Value – The original estimate of
what the wholesale value of the leased
vehicle will be at the end of the lease term.
– Residual value factors into the cost of the
vehicle if you wish to purchase it at lease-end.

6. Important Lease Terms
• Money Factor – The borrowing cost of the
lease. A money factor is similar to an
“interest rate” or “APR” but expressed
differently.
– To convert the money factor to a recognizable
interest rate, multiply it by 2400. For example,
a money factor of .00333 x 24 = 8% interest.

7. Other Lease Terms
The previous terms form the basis of your lease
agreement. Here are some other terms you
should also be familiar with.
• Adjusted Capitalized Cost – The basis
used to calculate lease payments, including
the vehicle price (cap cost), additional fees,
optional services, minus any cap cost
reduction (e.g. down payments and/or trade-
ins).

8. Other Lease Terms
• Indirect Financing – Refers to financing
that comes through an outside financial
institution, rather than through the dealer.
• Gap Insurance – A type of insurance
offered to auto lease customers. It pays
the difference between what you owe and
what the vehicle is worth in the event of it
being declared a total loss.

9. Other Lease Terms
• Lease Assumption – A low-risk way to
exit a lease early without penalties.
Essentially, someone else takes
responsibility for your lease under the
terms and conditions outlined in the
original contract.
– Typically, a lease assumption means the
original lessee walks away from the lease
without any future liability and the new lessee
assumes all liability for the lease contract.

10. About Swapalease.com
• Swapalease.com is the world’s largest
vehicle lease marketplace.
• Our goal is to match individuals who want
to get out of their lease, with individuals
who are looking for short-term leases with
attractive payments and no money down.

11. Follow Us & Learn More
• Join the conversation on car news and leasing on
the Swapalease.com Facebook page.
• Follow auto and leasing trends at the
Swapalease.com Twitter account.
• Circle Swapalease.com on Google+ for the latest
updates.
• For tips and tutorials on transferring your lease,
check out the Swapalease.com blog.