Glossary of Terms


LBA Community AutoProgram

Glossary of Terms

Adjusted Capitalized Cost
The Adjusted Capitalized Cost is the net dollar amount that is amortized over the term of the lease, derived by subtracting the capitalized cost reduction from the capitalized cost.

Advertising Fee
An Advertising Fee is the amount charged to the dealer by the manufacturer for local, regional and national advertising, which may differ by vehicle model and geographical region.

Base Price
The Base Price is the price of a vehicle which includes standard equipment, factory warranty, freight, and advertising and destination charges, but excludes options or equipment packages installed at the factory.

Capitalized Cost
Capitalized Cost is the total value of the vehicle used for calculating the lease payment, which is similar to the selling price of a vehicle on a purchase transaction.

Capitalized Cost Reduction
The Capitalized Cost Reduction is the amount paid which reduces the monthly lease payment which is part of the drive-off fees assessed at lease inception. Cash, net trade-in value and rebates may be utilized. The Adjusted Capitalized Cost is the result of subtracting the Capitalized Cost Reduction from the Capitalized Cost.

Customer Service Index
Also referred to as a Customer Satisfaction Index (CSI), a Customer Service Index is a rating system utilized by auto manufacturers based upon the overall consumer purchasing or service experience at the dealership and varies among manufacturers.

Depreciation (Lease)
Vehicle Depreciation is the dollar amount of vehicle value lost during the term of a lease. It is derived from subtracting the Residual Value, the estimated value of the vehicle at the end of the lease, from the Manufacturer’s Suggested Retail Price (MSRP).

Destination Charge
The Destination Charge is the fee the manufacturer charges the dealership for shipping, freight and delivery of a vehicle from the factory to the dealership, or port of entry.

Down Payment (Purchase)
The Down Payment is the initial dollar amount paid on a vehicle in order to reduce the total amount financed.

Equipment Package
An Equipment Package is a combination of factory-installed optional accessory equipment that enhances vehicle performance, appearance or value offered by the manufacturer at a lower total cost than if ordered and installed separately. Such packages can be designed for a particular function, i.e. ‘Climate Package’, geographical region, e.g. ‘California Package’, or a demographic or lifestyle, e.g. ‘Sport Package’.

Excess Mileage (Lease)
Excess mileage is an additional fee charged to the lessee at lease termination by the lessor for mileage that exceeds the original agreed-upon amount at lease inception. Typically the mileage allowance for a 36 month lease is 12,000 or 15,000 miles per year, but may vary from lessor to lessor.

Exclusive Authorized Dealer Contact
The Exclusive Authorized Dealer Contact is the only dealer representative who can provide LBA members their special, low member-only price on the vehicle of their choosing.

Finance Charge
The Finance Charge is the total dollar amount of interest a lender charges the consumer for the loan term.

Financing is a specific individual loan plan provided by a lender to a consumer whish takes into consideration the consumer’s credit worthiness, or rating, down payment, loan term and interest rate.



Interest Rate
The Interest Rate is the cost of credit, annualized, and expressed in terms of percentage, charged to a consumer for a loan.

Also Referred to as ‘Invoice Price’, because it is the one price that appears on each vehicle’s invoice the manufacturer sends the dealer representing the vehicle’s base pricing, factory-installed options with pricing, and destination fees, but which do not reflect the actual cost of the vehicle to the dealer. A dealer’s actual cost can vary due to such factors as holdback, factory-to-dealer incentives, and advertising and/or flooring costs.



Leasing, an alternative to purchasing, is simply a means of paying for the use of a vehicle, and mileage, for a specific agreed-upon length of time.

Loan Payments
Loan Payments are installments paid by the consumer to the lender, usually on a monthly basis, for a specific agreed-upon term and interest rate.

Member-Only Price
The Member-Only Price is the pre-arranged price of a vehicle that LBA AutoProgram dealers have agreed to provide to LBA members and affiliates. This price may be in relation to the vehicle’s total invoice or MSRP. Members may, upon meeting with the Exclusive Authorized Dealer Contact, request to see the vehicle’s invoice or MSRP to calculate and/or verify their special, low member-only price.

Money Factor
Established by the lessor, the so-called Money Factor is essentially the leasing equivalent of the Annual Percentage Rate (APR) in a purchase loan, usually expressed in decimal form, e.g. 0.00325.

Manufacturer’s Suggested Retail Price (MSRP)
The Manufacturer’s Suggested Retail Price, or MSRP, is the factory’s recommended selling price for a vehicle including standard equipment, and factory-installed options and accessories.


Options are available additional vehicle equipment or features not included in the base model that may be installed at the factory or by the dealer at additional cost.


Residual Value
Frequently specified as a percentage of the MSRP, the Residual Value is the estimated value of the vehicle at the end of a lease, established by the lessor and based, in part, on the lease term and projected resale value for a specific vehicle model. Closed-end leases allow the consumer the option of purchasing the vehicle at the end of the lease at the Residual Value.

Roadside Assistance
Roadside Assistance is the industry term for emergency auto services offered to consumers in the event of vehicle breakdown, which are generally included in factory and extended factory warranties, and include: towing, fuel delivery, locksmith, battery and tire services, and minor mechanical adjustments.


Term is the length of an auto loan or lease agreement, expressed in months.

Trade-In Value
The Trade-In Value is the dollar amount a dealership agrees to offer a consumer for their vehicle when used as a partial or full payment for another vehicle from the dealer.



A Warranty is a written agreement by the manufacturer providing for repair or replacement of specific vehicle components due to factory defect or malfunction for a specified period of time and/or mileage.

Wear and Tear
Wear and Tear is the industry term for the normal wearing that a vehicle can be expected to undergo under normal use for the duration of the lease. While varying from lessor to lessor, there are established limits in excess for which consumers will be charged when turning in the vehicle at the end of the lease.

Contact us:
Peter Beltran- AutoProgram Director
Tel: (213) 628-8510 ext. 230


Auto Program Corporate Partners