Some Answers to Questions About Leasing.
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Leasing is a financing agreement to "rent" vehicles or
equipment for a specific period of time, and is based on the
client's mileage or other special requirements. Unless there
is a pre-arranged agreement between both parties, there is no
transfer of ownership to the client at the end of the lease.
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The Lessee is the party or person signing the lease
agreement and who takes possession of the vehicle or
equipment. This person also assumes the financial
responsibility to fulfill the terms of the lease as defined in
the agreements.
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The Lessor is the financing institution that owns the
equipment or vehicle. It is the responsibility of the Lessor
to provide the lease-financing arrangements to the "end-user"
who is the Lessee.
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An independent Lessor is a company not affiliated
with an equipment or vehicle manufacturer. Terry McDonald
Leasing is an independent Lessor. The benefit of using an
independent Lessor is having the choice of leasing any make or
model, while receiving professional and unbiased financial
consultation and the ability to customize a lease unique to
the Lessee's particular needs.
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All leases utilize a projected lease-end value, usually
referred to, as the "Residual Value." In an Open-End Lease,
the Lessee assumes the risk of the value of the equipment or
vehicle at the end of the lease term. If the value of the
equipment or the vehicle is "less" than the pre-established
residual value, the Lessee is responsible for up to three (3)
monthly payments, as mandated by law. However, there is no
limit on the Lessee's potential "gain" if the equipment or
vehicle is sold for more than the residual value.
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In a Closed-End Lease the residual value is guaranteed
to the Lessee, and he has no risk, exposure or liability if
the vehicle is sold for less than the residual value at the
end of the lease term. However, the Lessee is responsible for
accumulated excess miles when the vehicle is returned to the
Lessor. The Lessee is also responsible for excessive "wear and
tear".
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The "Capitalized" cost includes ALL the money in the
lease, including, the price of the vehicle, taxes and
licensing fees, positive or negative trade-in considerations,
as well as any associated fees payable to the Lessor or the
Lessee.
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This is the amount paid up-front by the Lessee. It is
capitalized into the lease for the purpose of reducing the
amount financed to calculate the lease, which in turn results
in either a shorter term or lower payments.
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It is the length of time...expressed in months...that
has been agreed to by both the Lessor and the Lessee. Most
leases reflect terms between 12 and 60 months.
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This occurs when a lease is terminated prior to the end
of the scheduled term, either by being paid off by the Lessee,
being Repossessed, or by the death of the Lessee. Depending on
the circumstances, an early termination usually results in
additional charges.
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An amount, usually equal to one monthly payment, and
required in addition to the first payment. In today's market,
Security Deposits are more of an exception than a rule, and
are mostly encountered when there are credit issues associated
with the lease application.
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- What is the National
Vehicle Leasing
Association?
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This association... (NVLA)...
is a non-profit, member-supported, national trade association
representing the vehicle leasing industry. One of NVLA's main
objectives is to sponsor and conduct educational programs
designed to increase the public awareness of vehicle leasing.
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- What is a Certified
Vehicle Leasing
Executive?
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The NVLA offers the industry’s premier Certification
program for experienced Lessors. The program includes 80 hours
of classroom instruction and successful graduates receive the
designation of Certified Vehicle Leasing Executive (CVLE).
The program is designed to enhance the professional standards
and practices in the industry. It is the most distinguished
educational certification offered by the leasing industry.
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