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Finance Key Terms

 Fee that the creditor (also called the lending company or lessor) charges at the beginning of the lease term to cover administrative costs.

ANNUAL PERCENTAGE RATE (APR):  The cost of credit for one year expressed as a percentage.

ASSIGNEE:  The bank, finance company or credit union to which the dealership sells or assigns your retail contract or lease agreement.  

BASE PAYMENT (LEASE):  Monthly lease payment excluding taxes, insurance, maintenance fees and other fees.

CO-SIGNER:  A person who legally agrees to pay off your purchase or lease contract in the event you default on your payment obligations.

CREDIT APPLICATION:  The formal written application or request for credit.  It usually includes your name, address, Social Security number, date of birth and information about your financial ability to repay the finance contract.  By signing the application, you are giving the dealership authorization to pull a credit bureau report to check your history.

CREDIT BUREAU:  Agencies that provide credit reports.  The three most frequently used credit bureaus are Equifax, Experian and TransUnion.

CREDIT REPORT:  A report obtained from a credit bureau that contains information about your current and past credit obligations, account numbers, payment history and previous addresses.  

DISPOSITION (TURN-IN) FEE:  A fixed fee, specified in the lease contract, payable at lease-end if the lessee does not purchase the vehicle.  Kia Finance can waive this fee with a Loyalty Reward if you purchase or lease another new Kia. 

DOWN PAYMENT:  An initial amount paid to reduce the amount financed.

EXCESS WEAR AND USE:  Everyday driving can result in wear and tear on a vehicle, like tire usage, exterior dents and dings or interior upholstery stains.  At the end of a lease term, damage will be evaluated and there may be charges if it's considered excessive.  Useful tools like our online Lease-End Self-Assessment help make the turn-in-process easy so you can evaluate wear and use ahead of time.

FINANCE CHARGE:  The total dollar amount paid to a creditor for the use of credit.  

GAP (GUARANTEED AUTO PROTECTION) COVERAGE:  If a leased vehicle is totaled or stolen, there may be a gap between the amount of the insurance settlement and the remaining lease obligations.  Kia Finance GAP coverage waives the difference between what the car is worth and what you still owe.  You pay only your deductible and are not liable for the remainder of your lease payments.  Restrictions and limitations may apply.

LEASE AGREEMENT:  A contract outlining the use of a vehicle for a fixed period of time at an agreed amount of money, typically specifying allowed mileage and wear.

LEASE-END:  When the terms and conditions of a lease agreement are fulfilled in full.  Termination of a lease can be done early, but may include a penalty.

LESSEE:  The customer who is leasing a vehicle.

LESSOR:  The leasing company also known as the lending company, assignee or creditor.

LIEN RELEASE:  Once an auto loan is paid in full, the lien on the property is removed and the vehicle is owned free and clear.  

MONEY FACTOR:  The term money factor specifies a finance rate for a vehicle lease.  It determines how much you'll pay in finance charges each month during your lease.  The higher the money factor, the higher your monthly payments and the more you'll pay in total finance charges.

MONTHLY PAYMENT AMOUNT:  The dollar amount due each month to repay the credit agreement.

RESIDUAL VALUE:  Estimated value of the vehicle at the time the lease agreement expires which is predetermined at lease inception.

RETAIL CONTRACT:  The legal agreement governing the terms and conditions of your vehicle purchase.

RETAIL FINANCING:  Financing the purchase of a vehicle using flexible terms or lengths of time that are selected to repay your credit agreement.  Generally, the longer the term of the loan, the smaller the monthly payment, but the greater the total finance charge paid.  Common terms are 24,36,48,60 and 72 months.

SINGLE-PAY LEASE:  A lease where the lessee makes a single up-front payment instead of monthly installments.  The residual value does not change, but the money factor (the interest charge you pay when leasing a vehicle) is discounted, resulting in a lower total finance charge than with a traditional term lease.  

VEHICLE FINANCING:  The use of credit to borrow money for the payment of a vehicle.  Also commonly known as financing, retail financing, leasing or buying.  

Reference:  KIA Financing 101