Late charge. A fee charged for a past-due payment. This charge is usually either a percentage of the lease payment or a fixed dollar amount.
Late payment. A payment received after the specified due date. In most cases, after any grace period, a late payment triggers a late charge.
A contract between a lessor and a lessee for the use of a vehicle or other property, subject to stated terms and limitations, for a specified period and at a specified payment.
Lease balance (adjusted lease balance). The unpaid portion of the adjusted capitalized cost of the lease. The lease balance is reduced as you make your monthly payments, usually by use of a standard methodology such as the constant yield (actuarial) method. The lease balance is often a primary component of the early termination payoff amount.
Lease extension. Continuation of a lease agreement beyond the original term, often one month at a time. There may be a charge for extending the lease. If the extension continues beyond six months, new lease disclosures must be provided.
Lease factor. See Money factor.
The number of payments in the lease agreement. Generally, the number of payments and the number of months in the lease term are the same. However, there are some leases in which the numbers may be different, such as a single-payment lease that would disclose “1” as the number of payments and may disclose “24 months” as the lease term.
Lease rate. A percentage used by some lessors and assignees to describe the rent charge portion of your monthly payment. However, no federal standard exists for calculating the lease rate. Any rates or factors used in lease calculations do not have to be disclosed under federal law. If a lease rate is given as a percentage in an advertisement or on any lease form, the ad or form must also state, “This percentage may not measure the overall cost of financing this lease.” Some states may require lease rate disclosure using the state’s definition.
The period of time for which a lease agreement is written.
Lemon laws. State laws that provide remedies to consumers for vehicles that repeatedly fail to meet certain standards of quality and performance. Lemon laws vary by state and may not cover leased vehicles.
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.
Luxury car tax. A federal excise tax assessed on vehicles with a gross vehicle weight of less than 6,000 pounds and a value exceeding a threshold amount, which is adjusted periodically for inflation.