Sample Car Lease Contract – Lease Agreement Form

CONTRACT FRONT
(Lease Company Name)

Closed-End Vehicle Lease Agreement


Consumer vehicle leases are always “closed-end” leases, which should be specified here at the top of the lease agreement form. Closed-end agreements set a firm lease-end residual value, allowing the customer to return the vehicle at the completion of the lease without further financial obligation. “Open-end” leases are only for commercial vehicle use, and require the customer to pay any difference at lease-end between the initial residual value and the actual lease-end market value.
NAME OF LESSEE (Customer) LESSOR (Dealer)
Name(s)
Address
City, State Zip

If two people’s names appear here as primary signers, such as husband and wife, both are equally responsible for the lease. Both names will appear on all legal documents, titles, and registrations associated with the lease, unless you request otherwise. The lease will appear on credit reports for both people. This is not the same as having one person’s name on the lease and having a co-signer or “guarantor”, whose name appears elsewhere (at the bottom) of the lease agreement form. A co-signer or guarantor only becomes responsible if the primary signer(s) default or fail to pay on the lease. However, the lease appears as a debt obligation on the “guarantor’s” credit report just as if he was a primary signer.
 Name
Address
City, State Zip

 
This is an agreement to lease (the “Lease”) the vehicle described below (“Vehicle”). Lessor owns the Vehicle throughout the term of the Lease. Dealer is assigning this Lease and Vehicle to Lease Company (“Assignee”), and you agree to this assignment. In this Lease, “you” and “your” refers to any person signing this Lease as Lessee or Co-Lessee. “Lessor”, “we”, “us”, and “our” refer to Dealer and any Assignee. The Assignee will administer this lease.

This section identifies the Lessee (you), the Lessor (the dealer), and the Assignee (the lease company). It says that you are initially leasing the car from the dealer, but that the dealer will immediately hand over (assign) the lease to the lease company, assuming the lease company agrees to take it based on your credit approval. Therefore, the leasing company becomes the Lessor from this time forward. Payments and all matters concerning the lease should be addressed to the lease company, not the dealer.

I accept delivery of the Vehicle and acknowledge that it is in good operating order, equipped as described and has the odometer reading recorded below.
VEHICLE DESCRIPTION
New/Used Year Make/Model  Body Style Vehicle Identification Number

This section is the legal description of the vehicle. It’s particularly important in a lease that the information in this section be completely accurate, especially the VIN number and the mileage. Any inaccuracies here can cause serious problems later in the lease.
 Odometer Reading Personal/Business Use
Including:    __ Air Conditioning    __Leather    __Power Moonroof     __Custom Wheels     __Alarm System
__AM/FM System     __CD Changer     __Power Windows     __ABS
Other Dealer Installed Options _______________________________________________________

This section should accurately list all optional and dealer-installed equipment on the vehicle. This is important at the end of the lease when an accounting for the equipment must be made. Be sure there’s no equipment listed that is not actually on the vehicle. Also make sure you do not remove or modify any of the indicated equipment during the lease.
FEDERAL CONSUMER LEASING ACT DISCLOSURES
This specifies the amount you will pay to begin your lease. The specifics of how this figure is determined is explained in another section of the contract just below this section. There will also be another section below that explains where the money to pay this amount will come from.

Amount Due at Lease Signing
(itemized below)*          $_______________

 Monthly Payments     Your first monthly payment of $_______
is due on _________
followed by ____ payments of $_______
due on the _____th of each month.
The total of all your monthly payments
is $___________

This specifies the amount of your monthly lease payment, including any sales or use taxes. The first payment on a car lease is always due at the time the lease is started, at the time the contract is signed. All other payments are then due at the beginning of each payment period. Each payment is due on the monthly anniversary of the first payment. This section does not explain how the monthly payment is calculated. This is done in another section below, although the formula is never explained.
 Other Charges
(not part of your monthly payment)Disposition fee $________   Other _________________
Other _________________Total $___________

This section lists any charges that have not been added to the lease cost, which means these charges will be paid in some other way other than through your monthly payments. The most common example is a disposition fee, which is paid at the end of the lease when you return your vehicle to the lease company. It’s an administrative fee that is charged to compensate the lease company for the cost of paperwork, transporting, and preparing the car for auction. Watch here for extra dealer-added fees that are questionable, and could be negotiable. Sometimes these fees have official-sounding names, but are simply additional profit for the dealer.
 Total of Payments (the amount you will have paid by the end of the lease) $_______________

This figure might be a little confusing, but it’s for information (and legal) purposes only. It is the sum total of all the various payments associated with this lease, not just monthly payments. It is everything you pay at the beginning, middle, and end of your lease. It includes all fees, taxes, finance charges, and all other charges — and monthly payments. It’s the total amount of money that you will have spent on the lease, assuming you return the car at lease-end. If you choose to buy your vehicle at the end of the lease, you would add the purchase price to this figure to find the real cost of your lease/purchase.
*ITEMIZATION OF AMOUNT DUE AT LEASE SIGNING
Amount Due at Lease Signing
Capitalized cost reduction
First monthly payment
Security deposit
Title fees
Registration fees
Sales/use tax
Other
OtherTotal

This shows the amount of money required to be paid up front for the lease. It would include any down payment (capitalized cost reduction), first month’s lease payment, and a security deposit, if any. It also includes any official fees for taxes, title, and registration which the dealer collects from you and turns over to your local or county/state agency. It might also include a lease acquistion fee, if that fee has not already been included in your capitalized cost. Sales tax on your down payment and for rebates is generally indicated here. The dealer may add a fee or two of his own here, such as a document fee, which might be negotiable.
 $__________
$__________
$__________
$__________
$__________
$__________
$__________
$__________$__________		 How the Amount Due at Lease Signing Will be Paid
Net trade-in allowance
Rebates
Non-cash credits
Amount to be paid in cashTotal

The amount you are required to pay at lease signing doesn’t have to be all cash. If you had a trade-in vehicle, you get credit for the agreed upon value here. If there are any rebates from the dealer or manufacturer, or any other type of special discount, you get credit for those here. These credits, along with the amount of cash you’ll pay, should add up exactly to the amount of your “Amount Due at Lease Signing” shown in the previous box on this form.
 $__________
$__________
$__________
$__________$__________
YOUR MONTHLY PAYMENT IS DETERMINED AS SHOWN BELOW
Gross capitalized cost

This is a very important figure in your lease contract but isn’t itemized anywhere. It’s the agreed upon price of the vehicle, plus a bank fee (acquisition fee) that is standard in all leases, but never shown specifically. Sometimes, depending on lease company, the acquisition fee is required to be paid up-front in cash, and not added to your Cap Cost. This figure can also contain the amount of any service contract, insurance, or other services you may have purchased and chosen to finance with your lease. If you had a remaining balance on a previous loan or lease, after getting trade-in credit, that is also added into this figure. If you live in a state that requires all sales taxes to be paid at the time of your lease signing, this will also be included in this figure. It’s advisable to have your dealer itemize this amount for you so that you know exactly what you’re paying for in your lease. There’s too much opportunity for a dealer to make a mistake here and, because it’s not itemized in your contract, it would be very difficult to detect.
 $____________ The agreed upon value of the Vehicle ($________) and any items you pay over the lease term (such as service contracts, insurance, and any outstanding prior credit or lease balance)
Capitalized cost reduction

This is the same figure shown above in the “Amount Due at Lease Signing” section. It’s all of the things that reduce the price that your lease will be based on, thus reducing your monthly payment. It might include a cash down payment (if any), trade-in credit, rebates, and other special credits or discounts that you and the dealer agree upon. It does not include your security deposit (if any), taxes, fees, or official charges since these do not reduce the cost of your lease. In most states, you’ll pay sales tax on a down payment and rebate, but get a tax credit for a trade-in. These taxes appear in the “Amount Due at Signing” section above.
 – ____________ The amount of any net trade-in allowance, rebate, noncash credit, or cash I pay that reduces the gross capitalized cost
Adjusted capitalized cost = ____________ The amount used in calculating my base monthly payment
Residual value

Residual value is the estimated wholesale value of the vehicle at the end of the lease. It’s an estimate because no one can know for sure what the actual value will be. However, once set, the lease company is obligated to it. Lease companies use various data or data sources to help them with these estimates. The higher the residual, the lower your monthly lease payment. Some vehicles will have higher residuals than others for the same lease term. Lease companies often temporarily boost residual values for special lease promotions. Residual values are not usually negotiable.
 – ____________ The estimated value of the Vehicle at the scheduled end of the Lease Term used in calculating my base monthly payment
Depreciation and any amortized amounts = ____________ The amount charged for the Vehicle’s decline in value through normal use and for other items paid over the Lease Term
Rent charge

Rent charge is something of a misnomer in a lease contact since it has nothing to do with renting as we know it. It’s just a strange misleading name for the total amount that you’ll spend during the course of your lease on finance charges. It is simply a disclosure required by law of the sum of all your monthly finance charges. A lease is like a loan in that you are using someone else’s (the lease company’s) money to finance your use of a vehicle. And you must pay interest on the use of that money. In leasing, it’s called money factor, but you won’t find money factor or interest rate specified anywhere in your lease contract. The only figure you’ll find that relates in any way to finance charges is this one. If you don’t understand finance charges in a lease, or how to determine your interest rate, refer to our Lease Guide section, Car Lease Payment Formula.
 + ____________ The amount charged in addition to the depreciation and any amortized amounts
Total of base monthly payments = ____________ The depreciation and any amortized amounts plus the rent charge
Lease payments (Lease Term) ÷ _____ months The number of payments required during the term of my Lease
Base monthly payment

This is the amount of your monthly lease payment, not including any sales or use taxes. It’s called your Base monthly payment for that reason. If you look at the calculations just above this figure in your contract, you’ll see that it was determined by taking the amount by which the vehicle is estimated to depreciate over the life of the lease, adding the total finance charges, and dividing by the number of months in the lease. This gives you the base amount of each monthly payment, not including sales tax. This figure is oftentimes the source of mistakes in lease contracts. It’s very easy to miscalculate or use incorrect input data. It’s a good idea to verify this figure yourself by using the payment formula or the lease calculator in our Lease Guide.
 = ____________
Monthly sales/use tax

Most states require you pay sales tax or “use” tax on the amount of your monthly payment. The amount of that tax is shown here, if any. However, if you live in one of the few states that requires that sales taxes be paid up front, you either pay that tax in cash or include it in your lease’s capitalized cost — and no tax would appear here as a separate part of your payment.
 + ____________
Other + ____________
Other + ____________
Total Monthly Payment = $____________
EARLY TERMINATION. You may have to pay a substantial charge if you end this Lease early. The charge may be up to several thousand dollars. The actual charge will depend on when the Lease is terminated. The earlier you end the Lease, the greater the charge will be.

This warning is required to be in all lease contracts. It simply serves to notify you that leases are not designed to be ended early. To do so will possibly, but not always, be very expensive. The chances of a lease being expensive to end early is increased when the lease cost is high relative to the vehicle’s MSRP, if there is no down payment, if no trade-in, if the interest rate (money factor) is high, and/or if residual value is high.
EXCESSIVE WEAR AND USE. You may be charged for excessive wear based on Lessor’s standards for normal use and for mileage in excess of ___________ miles per year at the rate of ____ cents per mile.

All leases have this kind of clause. It requires that you pay at lease-end for any wear and tear that the lease company judges to be excessive. Most lease contracts contain some details on what is considered excessive. This is typically outlined in the small print on the back of the contract form (see below in this sample contract form). You will also be required to pay for any mileage in excess of the allowance set by this contract. Since your residual value is set based on this allowance, any additional miles you drive will lower the lease-end value of the vehicle below the specified residual value. You are therefore expected to pay the difference on a cents-per-mile basis. There are no set standards for this per-mile charge. Expensive vehicles usually have a higher per-mile charge than less expensive vehicles.
PURCHASE OPTION AT END OF LEASE TERM. You have the option to purchase the vehicle AS-IS, WHERE-IS at the end of the Lease Term for $___________ , plus any required taxes and fees.

Car Deal Finder
Most lease contracts provide an option to purchase the vehicle at the end of the lease for a set price, specified here. This price is typically the same as the residual value, specified earlier in this contract. However, some lease companies will add a nominal amount (for administrative purposes) to the residual to make the purchase price a little higher. Some specify this add-on fee separately, some simply include it in the purchase price specified here. If you think you’ll consider purchasing your vehicle at lease-end, a low residual value will be beneficial to you, although your monthly payments will be higher. At the end of your lease, you should always evaluate the purchase price to determine if it’s a fair price. If not, the lease company may be willing to negotiate the price.
OTHER IMPORTANT TERMS. Review this Lease for additional information on early termination, purchase options, maintenance responsibilities, warranties, late and default charges, insurance, and any security interests, if applicable.
PAYMENT SCHEDULE. I agree to make payments to Lessor according the schedule above. The first payment is due on the Lease date.The second payment is due no later than 34 days after the Lease date. If the total monthly payment includes sales or use tax, this payment amount may vary to the extent of any tax increase or decrease.
LATE PAYMENT CHARGE. If any payment is not paid in full within 10 days after it is due, you will owe a late charge of 5% of the part of the payment that is due.
VEHICLE WARRANTIES. If the Vehicle is new, it is covered by Manufacturer’s new vehicle warranty. If the vehicle is used, it is not covered by a warranty unless identified below.
Warranty _________________________________________________________________________
ESTIMATED FEES AND TAXES DURING LEASE TERM. The total estimated amount you will pay for official and license fees, registration, title, and taxes over the term of your Lease, whether included with your Monthly Payment or assessed otherwise: $___________

This section frequently causes concerns but it shouldn’t. It’s an informational figure. It’s merely the dealer’s best guess at how much you’ll spend over the life of the lease for official fees, taxes, licenses and such. It is rarely accurate but it doesn’t matter because it is really not part of your obligations to this contract.
VEHICLE INSURANCE. I will pay for and maintain during the Lease term, and until the Vehicle is returned to Lessor, insurance on the Vehicle that covers both you and us. The coverage must be not less than $100,000/$300,000 bodily injury, $50,000 property damage and physical damage coverage or a combined single limit of $500,000 for bodily injury and property damage for any one accident and physical damage coverage with deductibles not to exceed $500 for collision and $500 for comprehensive. The Policy of Public Liability insurance must show Assignee as an additional insured. the Policy of Physical Damage Insurance must show Assignee as loss payee. The policies must be written by an insurance company acceptable to Lessor. I agree to show proof of insurance to Lessor upon request. No other types of insurance are required by Lessor.

This section states that you as the Lessee are required to have and maintain proper insurance on the vehicle. To not do so puts you in violation of the lease and could subject you to default proceedings, which could be very expensive. The amount of insurance required is usually more than many people typically have on their vehicles, making it somewhat more expensive for these people. Actually, the amount of insurance required is very smart in these days of expensive repairs and liability lawsuits, whether you’re leasing or buying. In event of an accident, your insurance would pay for repairs just as if you owned the car. Be sure to get your repairs done by a reputable repairs shop who uses high quality manufacturer’s parts. Otherwise, you may have to pay at lease-end to have the repairs done correctly. If your vehicle is totally destroyed or stolen, your insurance pays the lease company (it’s their car) for the current market value of the vehicle, not what you still owe on the lease. If you owe more than the insurance pays, you may be responsible for the difference. However, if you have gap insurance, or this contract states (in the small print on the back) that you are not responsible, you have nothing to worry about. For more details, see the section in this sample contract, “Total Loss of Vehicle.”
OPTIONAL SERVICE CONTRACT. An optional service contract promises to perform services or provide benefits relating to the maintenance or repair of the Vehicle. These coverages are not provided by the Lessor. I must pursue all matters relating to these coverages through the provider. The terms and conditions for these coverages are in a separate contract, which I have read and received.
Price: $_____________ Provider:_______________________________________
If the price of any service contract is not included in the amount due at Lease signing, the price will be included in the Gross Capitalized Cost and will be subject to lease charges.

There is typically no need for an optional service contract in a lease. It’s advisable to lease for a term that is no longer than the manufacturer’s warranty that comes with the new vehicle, making an additional warranty unnecessary. The exception is when you may, for whatever reason, choose to lease for a term longer than the new-vehicle warranty. Remember, an optional warranty only kicks in after the expiration of the manufacturer’s warranty.
NOTICE TO LESSEE AND CO-LESSEE: (1) CAUTION — IT IS IMPORTANT THAT YOU THOROUGHLY READ THIS AGREEMENT BEFORE YOU SIGN IT. (2) YOU WILL NOT SIGN THIS AGREEMENT BEFORE YOU READ BOTH SIDES OF IT OR IF IT CONTAINS ANY BLANK SPACES TO BE FILLED IN. (3) YOU ARE ENTITLED TO AN EXACT COPY OF THE LEASE YOU SIGN. YOU WILL KEEP IT TO PROTECT YOUR LEGAL RIGHTS. BY SIGNING BELOW, YOU ACKNOWLEDGE THAT YOU HAVE READ BOTH SIDES AND RECEIVED A COMPLETED COPY OF THIS LEASE AGREEMENT.    

This important notice is often ignored in lease contracts. Essentially, it says that you should read and understand your contract before you sign, that you should not sign if there are important blank fields that “will be filled in later,” and that you know you should get a complete copy of the contract after you sign. It’s important that you realize there is no 3-day “grace” period after signing a vehicle purchase or lease contract. There is a common misconception based on laws that protect consumers from door-to-door sales and certain other kinds of contracts. Once you sign your lease contract, the deal is sealed and you’re obligated to its terms and conditions. A dealer is not likely to be sympathetic to customers who come back in a few days saying they don’t want the car or want out of a deal. If you have any doubts or need extra time, take the contract home with you and come back tomorrow — though the dealer will not like it because he knows you might not come back.
LESSEE: __________________________________________ BY: ____________________________
CO-LESSEE: _______________________________________ BY: ____________________________
GUARANTY: I/we jointly and severally guaranty payment of all amounts owed under this Lease. This means that if the Lessee and/or Co-Lessee fails to pay any money owed, I/we will pay it. Upon default under this Lease, Lessor may proceed immediately against me/us for payment, without first proceeding against the Lessee, Co-Lessee, any other guarantor, or any security. My/Our guaranty of payment is unconditional, and will not be affected by any settlement, extension, renewal or amendment of the Lease, or the release of any person or security. I/We waive all notices of every kind and nature and also waive all rights to demand and presentment.

This section only applies if you have someone who is acting as co-signer (a “guarantor”) for your lease. There can be more than one co-signer. A co-signer might be necessary if you have a flawed credit history, or no credit history, as might be the case with a young new driver. It might possibly allow you to get a lower interest rate than you would be able to get on your own. It can allow you to lease when you would not be able to do so if you had no co-signer. Anyone who acts as a co-signer will be completely responsible for the lease should you, the Lessee, default in some way and are unable or unwilling to fulfill the obligations of the lease. The lease company can come to the co-signer at the first sign of problems without even contacting the Lessee first. Therefore, a co-signer should not take on this responsibility lightly or without serious consideration of what it means.

Guarantor Signature __________________________________ Print: _______________________________
Guarantor Signature __________________________________ Print: _______________________________
Lessor accepts this Lease and assigns all right, title, and interest in this Lease and the Vehicle described herein to Assignee.Lessor (Dealer): _________________________________________ By: ____________________

This section is signed by the dealer who, by signing, turns over (“assigns”) the lease to the lease company. From this time forward, the lease company owns the vehicle and your lease contract. The lease company will pay the dealer the price that you and the dealer agreed upon for the vehicle. You then begin making monthly payments to the lease company. All matters regarding the lease, payments, insurance, accidents, and lease-end matters will then be with the lease company. All matters regarding the vehicle, such as maintenance, defects, repairs, or recalls, will be with the dealer.Your dealer may not sign the contract form on this line before he gives you a copy. This is not a problem.
CONTRACT BACK
VEHICLE MAINTENANCE AND USE
MAINTENANCE AND COSTS: You will pay all expenses for maintaining and repairing the vehicle, including having it serviced in accordance with the manufacturer’s minimum recommendations. You will keep the vehicle in good working order and condition and have any necessary repairs made using genuine manufacturer’s replacement parts. You will not make any changes to the vehicle which will affect it’s value or function without the lease company’s permission.REGISTRATION: You will register the vehicle as required in the state where the vehicle is located and pay all title, registration, and license costs. If you move, you will notify the lease company immediately. USE: You will not allow unlicensed drivers to operate the vehicle, allow it to used for illegal or commercial purposes, use it for towing trailers that exceed the manufacturer’s recommendations, remove the vehicle from the country without the permission of the lease company, or install equipment without written permission. You will not transfer, sub-lease, or rent the vehicle without the lease company’s permission.

You will keep the vehicle in good condition, as if you owned it. You will pay for all expenses of maintaining, driving, licensing, registering the vehicle, just as if you owned it. None of this is the responsibility of the lease company. You will not allow the vehicle to be misused, altered, or re-located without the lease company’s knowledge and permission. You will allow only authorized licensed drivers to operate the vehicle.
ENDING YOUR LEASE
VOLUNTARY EARLY TERMINATION: You may terminate this lease early and, if you want to return the vehicle, you will owe the lease company an amount that will be determined as follows: The amount of your base monthly payment (without tax), times the number of payments not yet made, PLUS any official fees or taxes, PLUS the residual value, PLUS a disposition fee, MINUS the “Realized Value” (the amount the lease company would get by selling the vehicle at a wholesale dealer’s auction), MINUS unpaid finance charges.

The lease company’s way of calculating unpaid finance charges uses the “actuarial” method, which usually results in your owing more than you might expect. When your lease payments were first calculated in the beginning of your lease, the amount of each payment going to finance charges was the same each month for the life of the lease — and the amount going to pay down the depreciation was also the same each month. However, when you end your lease early the lease company has the right to “recalculate” your lease based on a financial formula that assigns more of your early monthly payments to finance charges, and less to paying off the capitalized cost. This means, for example, if you’re halfway through your lease and want to end it, by the lease company’s calculations, you still owe more than half of the original capitalized cost of your lease.

RETURN OF VEHICLE AT SCHEDULED TERMINATION DATE: Your leases ends one month after the last monthly payment is due, unless you and the lease company agree to extend the lease. You will either purchase the vehicle or return it to a location designated by the lease company — usually a local dealer. You must pay for any excessive wear or damages. You also must pay for mileage in excess of the amount you agreed to at the beginning of the lease, as specified elsewhere in this contract.PURCHASE OPTION AT END OF LEASE: You have the option to purchase the vehicle at lease-end for the amount specified elsewhere in this contract. You must pay any related official fees or taxes.

You have the option to purchase your vehicle at lease-end, for the guaranteed purchase price stated in this contract. Depending on lease company, you have to pay a fee to exercise this option.
 OPTION TO PURCHASE VEHICLE BFORE END OF LEASE: You have the option to purchase the vehicle prior to the normal lease end date for the following amount: The amount of your base monthly payment without tax) times the number of payments not yet made, PLUS the residual value, PLUS an early purchase option fee (specified elsewhere in this contract, if any), MINUS unpaid finance charges. You must pay any related official fees or taxes.

The lease company’s way of calculating unpaid finance charges uses the “actuarial” method, which usually results in your owing more than you might expect. When your lease payments were first calculated in the beginning of your lease, the amount of each payment going to finance charges was the same each month for the life of the lease — and the amount going to pay down the depreciation was also the same each month. However, when you end your lease early the lease company has the right to “recalculate” your lease based on a financial formula that assigns more of your early monthly payments to finance charges, and less to paying off the capitalized cost. This means, for example, if you’re halfway through your lease and want to end it, by the lease company’s calculations, you still owe more than half of the original capitalized cost of your lease.

EXCESSIVE WEAR AND TEAR: If you don’t purchase your vehicle at lease-end, and you have excessive wear and tear, you will either have the problems fixed yourself or pay the lease company for the cost of fixing the problems, as determined by the lease company. Excessive wear and tear includes, but is not limited to the following: 1) any mechanical defect or failure, 2) broken or missing parts or accessories, 3) damaged body, fender, trim, lights, or windows, 4) chipped paint, 5) interior rips, burns, stains, or excessively worn areas, 6) missing spare tire or jack, 7) tires with less than 1/8 inch of tread at the shallowest point, or 8) safety or emission control equipment not in proper working order.

Most lessees who maintain their vehicles well and keep damages repaired will have no problem with wear and tear fees at lease-end.

SECURITY DEPOSIT: The lease company may require a security deposit to be paid in the amount specified elsewhere in this contract. The lease company will refund this deposit to you at the end of the lease after deducting any charges that you may owe them. No interest will be paid to you.

Depending on your credit rating, you may not be required to make a security deposit. If you do, it will be in an amount that is approximately equal to one month’s lease payment. Some leasers confuse security deposit with down payment. A security deposit is returned to you at lease-end, unless it must be used to help pay possible lease-end charges, such as excessive mileage charges. A down payment is made at the beginning of a lease to pre-pay some of the capitalized cost — to reduce the amount of your monthly payment. It is not returned.

ODOMETER DISCLOSURE: Federal law requires that you provide an accurate written statement of the vehicle’s odometer reading at the time you end your lease.
DEFAULT
DEFAULT: You will be in default of this lease agreement if any of the following occur:
a) You do not make a payment when it is due.
b) Bankruptcy
c) You become incompetent or die
d) You provided false or misleading information for this lease
e) Vehicle is stolen, lost, destroyed, or seized
f) You sub-lease, transfer, or rent vehicle without permission
g) You fail to pay traffic fines or tickets when due
h) You fail to comply with any other provisions of this lease.WHAT YOU WILL OWE ON DEFAULT: Upon default, you will owe the lease company: 1) early termination charges (described earlier in this contract), 2) collection, repossession, storage, and sales expenses, and 3) legal and attorney’s fees, if any.

A lease is a legal contract like any other. It requires that you fulfill your part of the deal, or else you are in “default.” The lease company can then sue you to pay what you still owe on the lease, and can take the vehicle from you. Some people have the misconception that they can end their lease cleanly by simply returning the vehicle to the lease company and stop making payments. This thinking comes from the mistaken notion that leasing is like renting. It isn’t, and it doesn’t work the same way. Ending a lease in this way will result in significant cost, headaches, no car to drive, and a damaged credit history. If you need to end your lease, do it in the proper way. See the “Early Lease Termination Guide” elsewhere in this Lease Kit.
 TOTAL LOSS OF VEHICLE: If you suffer a total loss of the vehicle you will immediately notify the lease company and your insurance company. Your insurance company will pay your lease company for the value of the vehicle.[IMPORTANT NOTE: Your insurance company will only pay what the vehicle is currently worth, minus your deductible, not what you still owe on your lease. If this section of your contract does not contain a statement such as the one below, you do not have “gap” protection and will owe the lease company additional money after the insurance has been paid. The amount of this money could be large.]The following statement is included in some lease contracts, but not others:“If we (the lease company) do not provide you with a comparable replacement vehicle, this lease will terminate and you will owe nothing more after the insurance company has paid us for the loss of the vehicle”.
ADDITIONAL PROVISIONS
OWNERSHIP: This is a lease agreement. The lease company owns the vehicle.LIMITATION OF LIABILITY: The lease company is not responsible for damages or defects in the vehicle— these are dealer and manufacturer responsibilities. You must continue to pay your lease payments even though the vehicle may not be in your use due to it being in the shop for repairs. HEIRS AND REPRESENTATIVES: If you die, the responsibility for the lease may fall on your heirs, successors, or representatives.NOTICES: You must notify the lease company immediately of any change in your address.

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