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Important Leasing Terms You Should Know

If you're thinking about leasing a heavy truck, it's important for you to understand certain terminology before you sign a contract. Here are some key leasing terms every fleet manager should know before leasing a truck. 

Administration Fee: An amount you may pay upfront for different administrative tasks. The tasks may include processing your lease application, verifying your insurance and running your credit report.  

Capitalized Cost Reduction: The total amount of the vehicle's down payment or the trade-in allowance.

Disposal Fee: If you decide not to purchase the vehicle at the end of the lease, you may pay a disposal fee to the leasing company so they can recoup some of their expenses.  

Gross Capitalized Cost: The total amount of expenses you are responsible for paying over the term of the lease. This may include fees, service contracts and insurance. Based on the vehicle's blue book value or a price previously agreed to by you and the lessor. 

Lease Factor: The amount leasing companies use to decide how much to charge every month. The lease factor is usually a decimal figure.

Net Cap Cost: This figure, which is capitalized at the beginning of the process, is the equivalent to your gross capitalized cost minus the capitalized cost reduction. 

Residual Value: How much the vehicle is worth at the end of the term. The leasing company uses the same value in the beginning to determine your base monthly payment, depreciation and amortization amount.

Please contact us today if you have any questions about the leasing process. We'd be happy to help! 

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