The lease contains terms which the consumer may not know but which are important to understand since they determine the nature of the contract the consumer is signing. The following are the important terms to know.

• Amortized Amounts: These consist of fees a lessor is required to collect, such as taxes and registration fees These expenses are paid off gradually as a part of each monthly payment. Expenses for insurance and maintenance, when provided by the dealer, are also amortized.
• Base Monthly Payment: This depreciation amount is the value the vehicle is calculated to lose each month, plus the amortized amounts and the interest leasees pay in financing charges over the lease term, divided by the number of months the vehicle is leased.
• Capitalized Cost: This is the total price of the car as agreed to by the lessor and the leasee over the life of the lease term, plus the registration fees, title fees, and taxes.
• Capitalized Net Cost: This is the amount the leasee will have paid for the car after all payments have been made. This is the same figure as the adjusted capitalized cost as it takes into account any down payment made.
• Depreciation plus Amortized Amounts: The difference between the value of the car at the beginning of the lease and at the end of the lease is the car’s depreciation. If the leasee does not exercise the option to purchase the vehicle, the lessor will charge the leasee a fee averaging between $250 and $400 to cover the expenses the lessor incurs in preparing the car for sale.
• Open-End Lease: When this lease is terminated, the leasee is liable for the difference between a lesser fair market value and a comparable residual value given to the value in the lease. The residual value will be considered unreasonable if it exceeds the fair market value by more than triple that amount.
• Close-End Lease: When this lease is terminated, the leasee is not responsible for paying the difference between the residual value given to the vehicle in the lease and a lesser fair market value.
• Lease Rate: This figure is that percentage of the monthly payment which is rental charge. Some dealers will disclose to a lessor what this amount is. As of 2002, no federal standard governs how this amount is calculated, and dealers are not required to disclose how they arrive at the amount. However, if a lease rate is used in an advertisement, there must also be a disclaimer that the lease rate may not be an accurate reflection of the total cost leasee will pay for their leases. This figure is frequently used to deceive customers into believing they are paying less interest in financing the lease than they actually are.
• Money Factor: This is a decimal number used to determine the proportion of the monthly payment that consists of a rental charge. This figure is similar to an interest charge and is not required to be disclosed under federal law.
• Reasonable Standard: The Consumer Leasing Act stipulates that penalties for early termination and late payments or ceasing to make payments must be reasonable according to the amount of harm actually experienced or anticipated by the lessor.