The term lease agreement or lease contract, in car leasing, refers to the legal contract that is signed at the time of lease inception in which the lessee (person who is leasing) agrees to the conditions of the lease set by the lessor (lease finance company). This includes the price of the vehicle that the lease is based on, any other costs and charges, trade-in credit (if any) the term (lease months), mileage allowance, monthly payment amount, taxes, and official fees.

A lease agreement will also include descriptions of what constitutes a default, who may drive the car, restrictions, what insurance is required, how an early payoff is calculated, and other conditions. It also defines how and when the car is to be returned and the lease-end purchase option price.

It is important to leasing consumers that they read and understand the lease contract they are signing. It’s easy enough for mistakes and inaccuracies to creep in. In particular, make sure vehicle price is the same as that which was negotiated and that no extra unexplained costs have been added. Although finance rate (money factor) is not shown in a lease agreement, customers should ask the dealer for that important figure. And be able to convert money factor to interest rate, which is more familiar to most people.

Here you can find a sample car lease contract agreement form.