Used Cars Terms and Definitions

Early termination charge The amount you owe if your lease ends before its scheduled termination date calculated as described in your lease agreement. The earlier your lease is terminated the greater this charge is likely to be. T0. Regulation M The regulation issued by the Federal Reserve that implements the Consumer Leasing Act. Residual value guidebooks Publications used in part by some lessors and assignees to establish vehicle residual values. Different guidebooks are more popular in different regions of the United States and with different lessors and assignees. Purchase-option fee An amount in addition to the purchase price you may have to pay to exercise any purchase option in your lease agreement. Independent leasing company A leasing company that offers leases directly to consumers and businesses and is generally not affiliated with a particular automobile manufacturer. Money factor A number often given as a decimal used by some lessors or assignees to determine the rent charge portion of your monthly payment. This number is not a lease rate and cannot be converted to a lease rate by moving the decimal point. 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. Incentives Amounts rebated or credited or special programs offered to encourage the leasing of certain vehicles. Security interest If stated in your lease agreement a lessors or assignees legal right to your property such as stocks or bonds that secures payment of your obligation under the lease agreement. Fair-market-value purchase option Your right to purchase a leased vehicle at scheduled termination in accordance with the terms specified in your lease agreement for a price determined by referring to a readily available guide to used-car values or another independent source.

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	Did You Know?
	Buying A Lemon Vehicle "Lemons" are sometimes resold to consumers as used cars. The lemon laws were enacted to protect consumers from having to keep a new car that has recurring problems. If someone buys a new car with major problems and the manufacturer fails to repair the defect in a certain amount of time the manufacturer may be required to refund the consumer's money by buying the vehicle back.