Minimum Lease Payment

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Definition of 'Minimum Lease Payment'

A minimum lease payment is the lowest amount of money that a lessee must pay to the lessor each month. The minimum lease payment is calculated based on the lease term, the interest rate, and the residual value of the leased asset.

The minimum lease payment is important because it determines the total cost of the lease. The lessee will be responsible for paying the minimum lease payment for the entire lease term, even if the leased asset is damaged or destroyed.

The minimum lease payment is also important because it can affect the lessee's credit score. If the lessee fails to make a minimum lease payment, it can be reported to the credit bureaus and damage the lessee's credit score.

There are a few things that lessee's should keep in mind when considering a lease. First, the lessee should make sure that they can afford the minimum lease payment. Second, the lessee should make sure that they understand the terms of the lease, including the residual value and the early termination fee. Third, the lessee should compare the lease to other financing options, such as a loan or a purchase.

If you are considering leasing a vehicle, it is important to speak to a qualified financial advisor to make sure that you are making the best decision for your financial situation.

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