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What is an acquisition fee?

Couple signs paperwork on an auto lease
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An acquisition fee is a fee you pay when leasing a car or other types of vehicles. 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 this cost into your budget when shopping for a car to lease. 

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 and is also sometimes labeled a bank fee or administrative fee. The acquisition fee could be charged upfront or rolled into your monthly lease payments. 

How much is an acquisition fee?

An acquisition fee for an auto lease generally ranges from $395 to $895 but may vary depending on the vehicle in question and the leasing company you’re working with, according to Edmunds. Typically, the more expensive the car, the higher the acquisition fee. A luxury vehicle will almost always come with a higher acquisition fee than a mid-range 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 easiest 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, read it carefully to determine whether there’s any mention of an acquisition fee.  

Lenders are good at hiding fees within the fine print, so it may be difficult to spot. Acquisition fees can also be bundled into your monthly lease payment. Whether it’s paid upfront or part of your monthly lease installments, legally, lenders are supposed to disclose any fees or extra charges if you ask. 

Are acquisition fees negotiable?

Similar to purchasing a car, you should at least try to negotiate. The acquisition fee and other lease features, such as trade-in value, interest rate and loan duration may be negotiable. If it doesn’t work out, you can always look for a lease somewhere else that doesn’t include an acquisition fee. There are often lease specials offered by manufacturers and dealers that might offer better options, so it’s always important to shop around.  

It’s also worth noting that in the rare cases when you can negotiate a lower acquisition fee with a lender, they may raise your money factor in response. Pay careful attention to the terms of your lease agreement before signing on.  

How to pay an acquisition fee

If your leasing company charges an acquisition fee, this expense can either be paid upfront or rolled 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. This increases monthly lease payments and costs you more over the long run due to compound interest.  

Adding the acquisition fee to the loan can help, however, 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 loan, you’d be able to recoup part of the money. 

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 have no luck, consider finding a new offer. Don’t be pressured to accept the lease terms. 

Before finalizing a lease agreement, contact several companies to see what kind of terms you qualify for. Shopping around 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