In the beginning, vehicle leasing was primarily used by businesses. But, as the cost of new vehicles increased, more and more individuals decided to lease. An individual who wants to lease a vehicle owes it to them self to understand not only the lease agreement or contract, but the terminology used, most of which was adopted from business leasing.

As with any legal situation, the individual signing the lease agreement -- the lessee -- should read and understand the contract first. If the lessor will not provide a copy of the agreement for you to study at your office or home before you sign, walk away. Be sure you understand what responsibility the lessor will have to you. You can avoid dissatisfaction by clearly understanding "up front" what are your responsibilities under the terms of the lease agreement?

The Board of Governors of the Federal Reserve System -- empowered by Congress – just recently rewrote the rule governing consumer vehicle leasing -- Truth In Leasing or Regulation M. The new rules with regard to advertising and lease agreements will be effective October 1, 1997. In Ohio, the rule is enforced by both the Federal Trade Commission -- which has an office at Cleveland -- and the Office of the Ohio Attorney General.

• The amount of any up-front payment, such as a security deposit, title and registration fees.
• The number, amount and date of your payments.
• The total of your payments.
• The amount you must pay for license, registration, and other taxes, as well as any other fees.
• What kind of and amount of insurance you will need
• Any express warranty that applies
• Who is responsible for maintaining and servicing the vehicle?
• The standards for wear and tear.
• The penalties for default and/or late payments.
• Whether you can buy the vehicle, and if so, when and at what price.

• What is the capitalized cost or "cap cost"?
• Does the "cap cost" include "rebates" and "incentives"?
• What is the "net capitalized cost"?
• What is the "rate" or "money factor"?
• What is the "residual value"?
• Is it a "closed-end" or an "open-end" lease agreement?
• What is the "annual mileage limit"? Does it "fit" with the number of mileage you drive?
• What are your liabilities at "lease end"? Is there an "excess mileage charge"? How much is it? What is the charge for "excess wear and tear"?
• Does the lease agreement provide for "early termination"? If so, what is your financial responsibility to the leasing company?
• Does the manufacturer's warranty cover the length of the lease agreement? If not, can the leasing company offer you an "extended warranty" or "service contract"?
• Is "gap insurance" included?

The OVLA recommends -- based on a informal study in December 1996 by The OVLA of two years of complaints filed with the Consumer Affairs Section of the Office of the Ohio Attorney General -- that you clearly understand when you "put money down" or use a "trade in" to reduce the capitalized cost and, therefore, the monthly payment. If you do not understand the calculations used to arrive at the net capitalized cost, ask questions until you do.

Lease Dictionary - Find Out What All The Terms Mean Here

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What Questions Should You Ask?

What Are Your Responsibilities Under A Lease Agreement?

What Should You Look For In A Vehicle Lease Agreement?

Be Cautious!

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How To Go About Leasing A Vehicle.

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