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What Is an Acquisition Fee for an Auto Lease?

editorial_lease-2.jpg Cars.com illustration by Paul Dolan

An “acquisition fee” is a fee charged by an automotive leasing company for originating a lease. Sometimes called a bank fee or origination fee, it’s charged to cover the financial institution’s administrative role in creating the lease, such as getting a credit report and verifying your information. However, the amount of the fee is fixed and unrelated to your credit rating or other qualifications.

Related: Can I Trade in My Car on a Lease?

You should take note, as the acquisition fee can be a significant cost in leasing. It can range from about $600 to nearly $1,000, with higher fees typically associated with leases on luxury-brand vehicles. While the fee covers fixed administrative costs, it can also generate a little extra profit for the lessor. An automotive lease fee is similar, for example, to the origination points charged up front by a mortgage company for arranging a home loan. 

The acquisition fee is typically a component of the upfront costs, or cash due at signing, for a vehicle lease. Such costs can also include a down payment, the first month’s payment, a security deposit, a dealer prep fee or other charges.

How Do I Know the Fee for My Lease? 

Lease fees like the acquisition fee are among the details that federal Regulation M and some state regulators require lessors to disclose in lease documents, though some lessors can make them hard to find. Don’t hesitate to insist that all upfront charges are broken out and explained to you, and you understand them before signing. 

If you are considering a lease, note that there also will be end-of-lease charges, such as a disposition fee, due when you return the leased vehicle. The disposition fee is intended to cover the cost of preparing the vehicle for sale. You should ensure those are broken out and explained, too.

Can I Get Out of the Acquisition Fee?

Probably not. In theory, the acquisition fee should be negotiable. A lease is a large, complicated financial transaction that you should negotiate fully, just as you would a vehicle purchase. In addition to the vehicle price, any fee or change in the transaction should be negotiable, and you should comparison-shop for your best lease terms based on your qualifications. But in practice, lessors are seldom willing to accept any change in the acquisition fee, treating it as a fixed cost.

One thing to watch for, however, is that some leasing companies may allow the dealer arranging the lease to “mark up” or increase the acquisition fee, adding an amount that goes to the store. You should be able to negotiate or avoid that increase. You can tell if the fee has been padded in this way by comparing lease terms on the same vehicle from more than one dealership. 

Another thing to watch for is that sometimes a lessor will offer to lower the cash due at signing by adding the acquisition fee to the price of the leased vehicle (that’s the net capitalized cost in the lease agreement) and wrapping it into your monthly payment. You should avoid that if possible, as you’ll end up paying interest on the fee over the length of the lease.

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