Legal Terms Of Car Lease Takeover & Their Meaning

Legal terms are always hard to understand, even when it comes to car lease takeover! But you’ve got swallow this painful part if you wanna take over a leased car. Otherwise, you dive into a bad contract which costs you more than a brand new car!

So to avoid the bad contract, let’s dive into it let’s learn them.

Adjusted Capitalized Cost

Adjusted capitalized cost is the cap cost minus the cap reduction (you will read about both below) 

This is the figure that the leasing company will use to define your monthly payments.

Acquisition Fee

It’s the fee leasing companies charge in order to arrange the lease and is usually just a straight profit for them. 

Not all leasing companies take advantage of the acquisition fee! But if they do, it is not negotiable!

The acquisition fee is normally between $400 and $750 and it can be added up to the monthly lease payment.

Capitalized Cost

It’s the selling price of the car you have negotiated plus any further fees you might want to include in the monthly lease payment (such as acquisition fee) 

Capitalized cost is also referred to as “cap cost”. The lower you negotiate the purchase price of the car, the lower your monthly payment will be.

Capitalized Cost Reduction

Capitalized Cost Reduction is basically anything that reduces the cap cost – like down payment, trade-in allowance, rebates, etc. 

For example, if you negotiate the purchase price at $25,000 and you put $3,000 as a down payment, your capitalized cost is now $22,000 and your capitalized cost reduction is $3,000.

Capitalized cost reduction is also called “cap reduction”.

Car Lease Takeover

A car lease takeover involves a lease transfer; from the lease “seller” to you, the “lease” buyer. It is also referred to as car lease transfer.


Depreciation is the percentage of the dropped value of the leased car! Normally, the price of a new car drops 50% after 3 years.

Disposition Charge

The money you should pay when you wanna turn in the leased car. Leasing companies claimed this money is spent on cleaning and selling the car. It is around $250.

Gap Insurance

Gap insurance is for the cases when the leased car is stolen or totaled. Most leased companies provide buyers with gap insurance with no additional money.


This is the person who will be leasing the car from the leasing company.


The leasing company

Market Value

Market value is the private resale value of the leased car. It might go above or fall behind the Residual Value.

Money Factor

The money factor refers to the interest rate.

Residual Value

Residual value is the final value of the leased car when terms are over. Leasing companies predetermined the value of brand-new cars.


Make sure that the contract allows either the return of the car or its purchase.

Security Deposit

It is the money you should pay in advance for any possible damage you may cause the leased car. Not all leased companies require a security deposit.

Terms Of Car Lease

Terms of the car lease are the length of the leasing contract with the current lender. As a lease “buyer,” you should note that you acquire the left part of the term of the original lease.

Wear and Tear

This is the amount of deterioration or damage which the car leasing agency considers normal by end of the Term. This is aside from depreciation.

My Last Word To You

The greatest merit of the car lease takeover is that it costs less. But if you do not pay attention to the terms, it can cost you even more. Make sure you read all the terms before you sign the car lease transfer contract.


To find your desired car to take over its lease, click here.

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