LEASE: A contract between a Lessor (see Lessor) and a Lessee (see Lessee) for the hire of a specific asset. The ownership or asset is retained by the lessor, but the right to use the asset is given the lessee for an agreed period of time in return for a series of payments paid by the lessee to the lessor.

LESSEE: The party who uses the leased equipment, makes the payments and may deduct same as an expense in computing taxable income.

LESSOR: The party who is the owner of the leased equipment and receives the rental payments paid by the lessee.

OPEN END LEASE: The lessee is committed to the monthly payments and also guarantees the residual. Usually, the lessee also has first option to obtain the leased equipment at the guaranteed residual amount.

GUARANTEED RESIDUAL: The lessee guarantees the residual value, as established and accepted by the lessor and the lessee at the start of the lease. When the lease ends the lessee is responsible for any difference between the actual value of the asset and the lease residual. When the lessee does not purchase the vehicle, the lessee owns any lease equity or pays any shortfall. The advantage of a guaranteed residual is that it reduces the cost of the lease, as the lessor doesn't have to charge extra to recover the cost of residual value insurance or residual value risk. There are also no mileage penalties.

CLOSED END LEASE: The lessee is obligated to pay the lease payments and return the leased vehicle upon expiry in excellent condition. (Subject to "normal" vehicle wear and tear). Usually contains a penalty/payment obligation if certain predetermined usage "hurdles" are exceeded (i.e. mileage restrictions and condition).

P.A.P.P.: Represents Pre-Authorized Payment Plan and is a program whereby the lessee authorizes the lessor to debit its bank account for the required remittances on the lease contract.

RESIDUAL VALUE: The net value, if any, of the equipment at the end of the lease term. Residual value is determined by the lessor and agreed to by the lessee allowing for the lessees anticipated usage.

TERM: The period of time during which the lessee is entitled to use the equipment.

INSURANCE: The Lessee is required to and agree to maintain at their expense the stipulated insurance coverage, whether the vehicle is used or not, during the lease term and until you return the vehicle.

TAXES: The taxes the lessor must add to any payment or purchase which may include federal excise taxes and fuel consumption tax.

PERSONAL PROPERTY SECURITY ACT (P.P.S.A.): Allows for a public record of an owner's or creditor's interest in an asset and establishes the priority of claims. The lessor will register its interest in the leased asset with the government. The amount charged is the cost of registration, which varies, with the length of the term.

SECURITY DEPOSIT: A non-interest bearing refundable amount of money that will be held by the lessor to ensure the performance of all terms, conditions and obligations under the lease agreement. The lessor has the right to deduct from such security deposit any amounts owing under the lease that the lessee has not paid to the lessor. If any of the security deposit remains, the lessor will refund those funds to the lessee upon termination of the lease.

MORTGAGE SERVICES: Let Halton Autolease assist you with the same great service you have experienced with your vehicle lease. Contact your leasing representative to ask about our mortgage services and programs.