Acquisition Fee A charge included in most lease transactions that is either paid
upfront or is included in the total cost of the vehicle. This fee usually
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 in data and
accounting systems.
Adjusted Capitalized Cost (adjusted cap 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.
Balloon Payment
Estimated final payment that covers the remaining expected value of the
vehicle.
Base Monthly Payment
The portion of 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
sales/use taxes. Other monthly fees are added to this base monthly payment to
determine the total monthly payment.
Capitalized Cost
Also called "cap cost." The dollar figure that the lease is based on. It
includes the price of the car plus selected options. Other costs such as title,
license and documentation fees can sometimes be added in.
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.
Closed-end Lease (walk-away lease)
All BMW Financial Services leases 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, or 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 (BMW Financial Services) for miles driven in excess of
the maximum specified in the lease agreement. For all 7Series BMW
vehicles, the excess mileage charge is $0.25 per mile. For all other BMW
vehicles it is $0.20 per mile.
Excess Wear and Use
Amount charged by a lessor (BMW Financial Services) to cover wear and use 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 use or pay the lessor the
estimated cost of repairs.
Extra Mileage Purchase Policy
Customers may purchase extra mileage up front (above the standard 15,000
miles/year) at a rate of 20 cents per mile for 7 Series vehicles and 15 cents
per mile for all other BMW vehicles. The customer may receive a refund if they
do not use all of the extra miles during their lease term. Please see your
local BMW center for further details.
Full Maintenance
Covers all recommended Full Maintenance for 3 years/36,000 miles, as outlined
in the Service and Warranty Information booklet. Upgrades available. For
exclusions and limitations, see your authorized BMW center for details.
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 (BMW 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.
Gross Capitalized Cost (gross cap cost)
The agreed-upon value of the vehicle, which generally may be negotiated; plus
any items you agree to pay for over the lease term such as taxes, fees, service
contracts, insurance, and any prior credit or lease balance.
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 customer. The lessee is required to make payments and to meet other
obligations specified in the lease agreement.
Lessor
The person or organization who regularly leases, offers to lease, or arranges
for the lease of the vehicle. When you lease a BMW from BMW Financial Services,
BMW Financial Services is the lessor.
Manufacturer's Suggested Retail Price (MSRP)
Sometimes called "sticker price," the MSRP is set by car 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.
Purchase Option Price
An option in a lease that allows the lessee to purchase the vehicle at the end
of the lease term for a specific price, and in some cases, during the lease
term at an amount to be determined or at a specified price.
Refundable Security Deposit
An amount collected by the lessor at the beginning of the lease to ensure the
lessee's compliance with the terms of the lease. The security deposit is
generally refundable at lease end, provided there are no excess mileage or
excess wear and use charges, outstanding parking tickets or unpaid lease
payments. A few states do not allow security deposits but do allow a
reconditioning reserve. The reconditioning reserve can only be used to repair
the vehicle and cannot be used for past-due payments, late charges, parking
tickets, etc.
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 be 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.
Term
The duration of the term of the retail contract, usually expressed in months
(e.g., 24 months, 36 months).
Termination
The scheduled termination is the end of the lease term as called for in the
lease.
Title
Legal document that identifies the owner of the vehicle. The lessor (BMW
Financial Services), not you, holds the title to the leased vehicle.
