Cash Rebates

A cash rebate is provided by the manufacturer directly to the customer at the point of sale to lower the net price of the vehicle. Consumers usually choose to use the cash rebate as a down payment against a new vehicle's purchase price.

Dealer Cash Incentives

Typically paid to the dealers by the manufacturers to stimulate sales momentum or reduce inventory pressure for certain vehicles, there are many variations of dealer cash incentives. The most common structure provides a cash credit to the dealer upon the sale of a vehicle in the program. Another is for dealers to earn bonuses when they achieve sales volume targets. There are also programs where dealers earn the incentive when purchasing the vehicle from the manufacturer.

Disposition Fee

This fee is charged by the leasing institution at the end of a lease to cover the cost of retrieving and selling your vehicle if you choose not to buy it. The amount, which varies by each individual company, is fully disclosed in the lease contract. You will be billed for this charge after you turn in your vehicle.

Down Payment

The down payment is the initial payment that reduces the amount being financed. If leasing, this would be an initial payment that reduces the amount financed or that is applied to other amounts payable at lease signing.

APR Finance Rate

This term refers to the annualized cost of credit, shown as a percentage in a vehicle purchase.

Incentives and Rebates

An auto industry term that describes the programs that manufacturers and dealers provide to stimulate sales, Incentives and rebates take many forms and all lower the car-buying costs.

Manufacturers regularly offer their dealers incentives "dealer cash" to help them boost the sales of certain models. While dealers are not required to pass along these incentives in the way of customer savings, many will upon request.

Lease Term (months)

A lease term is the number of months of the term of a vehicle lease.

Special Leases

This term refers to special terms that are offered by the manufacturer to stimulate sales and lower the customer's monthly payment through subsidizing the vehicle's Residual Value (what they think the vehicle may be worth in the future) or Money Factor (the interest rate used to calculate lease payments).

Low-Interest Financing

Low-interest financing is a loan offered by the manufacturer's captive finance company at a below-market interest rate.

Marketing Support

This generalized term describes manufacturer to dealer programs specifically designed to assist dealers in marketing their vehicles. The most common program is in the form of cash credit to the dealers, who may or may not choose to pass some part of this money on to their customers.

Mileage Allowance

When leasing a vehicle, lease payments will be quoted on the number of miles allowed to be driven. (The primary factor influencing a lease payment is the expected Residual Value at the end of the term.) Customers can elect to purchase mileage up front if they expect to drive more average annual miles than the standard lease allows which adjusts the residual value downward and in turn raises the monthly payment. Generally the leasing company will require customers to pay a per mile penalty at the end of the lease term if the customer's actual driven miles exceeds this mileage allowance.

Money Factor

A money factor is a reflection of the interest rate used in lease payment calculations (also called the "lease factor.") Money Factor is a method of expressing an interest rate that is calculated by dividing the percentage interest rate by 2400 (regardless of the length of the loan). For example, 7.2% interest expressed as a money factor is 0.003.

Residual Value

The residual value is also known as the Guaranteed Future Value - the leasing company's estimate of what the vehicle will be worth at the end of the lease term. The higher the residual that is used, the lower your monthly payments will be.

Security Deposit

For a vehicle lease, the amount you may be required to pay (usually at the beginning of the lease) that may be used by the leasing company in the event of a default. Any unused amount will be refunded to you at the end of the lease term.