Acquisition Fee

A charge included in most lease transactions that either is paid up front or is included in the gross capitalized cost; may be called a bank fee, an administrative fee, or an assignment fee. This fee usually covers a variety of administrative or insurance costs. These may include the costs of obtaining a credit report, verifying insurance coverage, checking the accuracy and completeness of the lease documentation, entering the lease in data processing and accounting systems, and purchasing insurance for or reserving funds for residual-value losses, gap-coverage losses, and other lease losses. Without an acquisition fee, lessors have to charge higher rental charges.

Source: Federal Reserve Board

Last reviewed October 2022