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Transparency

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An agreement whereby in a closed-end lease, usually a full maintenance one, as a strategic commitment to the concept of true partnering with the customer, the leasing company makes all components of the rental calculation known to the lessee.

Information detailed typically includes: manufacturer’s suggested retail selling price of the vehicle; purchase discount; lump-sum taxes associated with the acquisition, e.g., VAT; estimated residual value of vehicle at lease end; interest rate for funding; margin on interest rate and/or separate management fee; registration expense; monthly charge for maintenance and tire replacements; limitations on maintenance and tire replacement, e.g., maximum number of tires allowed without an extra charge; cost of insurance coverage, with 3rd party liability separated from collision, physical damage and loss; and amount of insurance deductible (also known as the “excess”).

Agreements for transparency in leasing costs tend to more closely align the interests of the lessor and the lessee, and give to the lessee a better understanding of exactly where costs are incurred. With this understanding, both parties to the agreement are in a better position to control costs and eliminate unnecessary expense.

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