Glossary of Leasing and Financing Terms

Acquisition Fee:
A charge included in most lease transactions that is either paid up front or is included in the total cost of the vehicle. This fee covers a variety of administrative costs such as the costs of obtaining a credit report, verifying insurance coverage, checking the accuracy and completeness of the lease documentation, and entering the lease into data and accounting systems.

Adjusted Capitalized Cost:
The amount capitalized at the beginning of the lease, equal to the gross capitalized cost minus the capitalized cost reduction. This amount is sometimes referred to as the net cap cost.

APR:
The annualized cost of credit expressed as a percentage in a finance agreement. In a lease, there is no annual percentage rate or equivalent rate.

Balloon Contract:
A loan that is amortized only down to the expected end-of-term value, with a remaining balance to be paid in a lump sum at the end of the term. Land Rover Financial Services refers to this as an OwnersChoice contract.

Balloon Payment:
Estimated final payment which covers the remaining expected value of the vehicle.

Base Monthly Payment:
The portion fo the monthly payment that covers depreciation, any amortized amounts, and rent charges. It is calculated by adding the amount of depreciation, any other amortized amounts, and rent charges and dividing the total by the number of months in the lease. Monthly sales/use taxes and other monthly fees are added to this base monthly payment to determine the total monthly payment.

Capitalized Cost Reduction (cap cost reduction):
The sum of any down payment, or 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.

Closed End Lease:
All leases with Land Rover Financial Services are closed-end. This is 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. You may, however, be responsible for excess wear and excess mileage charges if they apply.

Depreciation:
Total amount charged to cover the vehicle's projected decline in value through normal use during the lease term as well as other items that are paid for over the lease term. It is calculated as the difference between the adjusted capitalized cost and vehicle's residual value. This amount is a major part of your base monthly payment.

Down Payment:
An initial cash payment in a lease that reduces the capitalized cost or is applied to other amounts due at lease signing. (See Capitalized Cost Reduction.) If you are financing, most retail transactions involve a down payment of 10 to 15 percent of the amount to be financed. However, it can be less, depending on your credit standing, ability to repay and other criteria. A down payment helps lower your monthly payment, as well as establish equity in your vehicle.

Early Termination:
Ending of the lease before the scheduled termination date for any reason. The reason may be voluntary or involuntary (for example, the vehicle is returned early, stolen, totaled, or you default on the lease). In most cases of early termination, you must pay an early termination fee.

Excess Mileage Charge:
A charge by the lessor (Land Rover Financial Services) for miles driven in excess of the maximum specified in the lease agreement. For all Land Rover Financial Services leases, the extra mileage charge is $.20 per mile.

Excess Wear and Tear:
Amount charged by a lessor (Land Rover Financial Services) to cover wear and tear on a leased vehicle beyond what is considered "normal". The charge may cover both interior and exterior damage, such as upholstery stains, body dents and scrapes, and tire wear beyond the limits stated in the lease agreement. The lessee must either repair the excess wear and tear or pay the lessor the estimated cost of repairs.

Extra Mileage Purchase Policy:
With Land Rover Financial Services, customers may purchase extra mileage up front (above the standard 15,000 miles/year), at a discounted rate of 15 cents per mile. The customer may receive a refund if they do not use all of the extra miles during their lease term.

Gap Protection:
A plan that provides you financial protection in case your lease vehicle is stolen or totaled in an accident. If the vehicle is stolen or totaled, the lessor (Land Rover Financial Services) will cover the difference between the early termination payoff and the amount for which the vehicle is insured. You will still be responsible for any past due amounts you may owe on your lease, a disposition fee, your insurance deductible, and any other policy deductions by your insurance company.

Lease:
A contract between a lessor and a lessee for the use of a vehicle, subject to stated terms and limitations, for a specified period and at a specified payment.

Lease Term:
The Period of time for which a lease agreement is written.

Lessee:
The party to whom the vehicle is leased. In a consumer lease, the lessee is you, the consumer. The lessee is required to make payments and to meet other obligations specified in the lease agreement.

Lessor:
Land Rover Financial Services becomes the lessor upon the assignment of the lease contract from the Land Rover Centre.

Manufacturer's Suggested Retail Price (MSRP):
Sometimes called "sticker price," the MSRP is set by vehicle manufacturers and, by law, must be posted on a window sticker.

Purchase Option:
Your right to buy the vehicle you have leased, before or at the end of the lease term, according to terms specified in the lease agreement. A lease agreement may or may not include a purchase option. All LRFS leases have a stated purchase option in the lease agreement.

Residual Value:
The end-of-term value of the vehicle established at the beginning of the lease and used in calculating your base monthly payment. The residual value is deducted from the adjusted capitalized cost to determine the depreciation and any amortized amounts. It is an estimate that may me determined in part by using residual value guidebooks. The residual value may be higher or lower than the realized value at the scheduled end of the lease.

Title:
Legal documentation that identifies the owner of the vehicle. The lessor (Land Rover Financial Services), not you, holds title to the leased vehicle.