What is an acquisition fee?

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An acquisition fee is a fee you pay when leasing a car or other type of vehicle. It may also be referred to as the assignment fee, administrative fee or origination fee. The fee is generally a few hundred dollars, so it’s critical to factor it in when shopping for a car.

What is an acquisition fee?

Almost any time you take out a loan, you will have to pay some sort of origination fee to the lender. This fee generally covers the cost of initiating the loan and running a credit check on a consumer. For auto leases, this is known as an acquisition fee. Your acquisition fee could be charged upfront or rolled into your APR.

How much is an acquisition fee?

An acquisition fee for an auto lease ranges from $300 to $1,000 and depends on the cost of the vehicle. In general, the more expensive the car, the higher the acquisition fee. A luxury vehicle will almost always come with a higher acquisition fee than a midrange sedan.

Unlike interest rates, the acquisition fee isn’t affected by the borrower’s credit score, income or other personal factors.

How do I know if my loan has an acquisition fee?

The simplest way to figure out if your lease comes with an acquisition fee is to ask the lender or dealer directly. If you already have the paperwork, look through and see if there’s a mention of an acquisition fee. Lenders are good at hiding fees within the fine print, so it may be difficult to spot. Legally, however, lenders are supposed to disclose any fees or extra charges if you ask.

Are acquisition fees negotiable?

Sometimes borrowers can ask the leasing company to waive the acquisition fee, but this depends on the company’s policy. The company has the right to decline, and you can look for a lease elsewhere without an acquisition fee. And even if you are able to negotiate a lower fee, the lender could raise your interest rate in response.

How to pay an acquisition fee

If your leasing company charges an acquisition fee, it can either have you pay the fee upfront when you sign the deal or roll it into the total cost of the loan.

If you choose the latter option, the acquisition fee will be added to the principal amount of the lease. If it is, it will also increase your monthly lease payments and cost you more than the original sum due to compound interest.

On the other hand, adding the acquisition fee into the rest of the loan can help if you end up totaling the car. If you pay the acquisition fee upfront and the car is in an accident, you won’t receive any of the acquisition fee back from the lender. But if you had rolled the acquisition fee into the monthly payments, you’d be able to recoup part of the proceeds.

The bottom line

Acquisition fees can only be avoided if you notice them before you officially sign the contract. If you try to negotiate the acquisition fee with the leasing company and it won’t yield, consider finding a new offer. Don’t be pressured in accepting the lease terms.

Before finalizing the lease agreement, contact several companies to see what kind of terms you qualify for. Shopping around for a lease is the best way to minimize or avoid the acquisition fee.

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Written by
Zina Kumok
Contributing writer
Zina Kumok has been a full-time personal finance writer since 2015. She’s a three-time nominee for Best Personal Finance Contributor/Freelancer at the Plutus Awards and a two-time speaker at FinCon, the premier financial media conference.
Edited by
Student loans editor