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, the vehicle is stolen or totaled, or you default on the lease). In most cases of early termination, you must pay an early termination charge.
Early termination charge. The net 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. The charge is generally the difference between the early termination payoff and the amount credited to you for the vehicle. Suppose, for example, that your early termination payoff amount is $16,000 and the amount credited for the vehicle is $14,000. The early termination charge would be $16,000 minus $14,000, or $2,000 in this case.
The total amount you owe if your lease is terminated before the scheduled end of the term before subtracting the value credited to you for the vehicle. The payoff is calculated as described in your lease agreement. The early termination payoff may include the unpaid lease balance and other charges.
Equal Credit Opportunity Act. A federal law that prohibits discrimination in credit transactions on the basis of race, color, religion, national origin, sex, marital status, age, source of income, or the exercise of any right under the Consumer Credit Protection Act.
In an installment sale or loan, the positive difference between the trade-in or market value of your vehicle and the loan payoff amount. When the loan is paid off, the equity is the market value of the vehicle.
A charge by the lessor or assignee for miles driven in excess of the maximum specified in the lease agreement. The excess mileage charge is usually between $0.10 and $0.25 per mile. Suppose, for example, that your lease specifies a maximum of 36,000 miles and a charge of $0.15 per mile over the maximum. If you drive 37,000 miles, the excess mileage charge will be $0.15 x 1,000, or $150.
Amount charged by a lessor or assignee 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.
Excessive wear-and-tear coverage. A plan that you may purchase that covers some or all of the charges for excessive wear and tear defined under the lease agreement. The coverage of these plans varies in the amounts and types of charges covered. Most plans deny coverage at early termination or if you are in default. Generally, these plans do not cover excess mileage.
Sum of excess mileage charge and excess wear and tear charge.
Extended warranty. See Service contract.