What Is a Disposition Fee?

A Disposition Fee is a charge imposed by the lessor (the entity providing the lease) when the lessee returns the leased vehicle at the end of the lease term. This fee is intended to cover the costs associated with processing and preparing the returned vehicle for resale. The Disposition Fee is typically outlined in the lease agreement.

Explanation: As part of the car leasing process, lessees are often responsible for returning the vehicle in good condition at the end of the lease term. The Disposition Fee is a predetermined fee specified in the lease agreement, and it is charged to lessees when they return the vehicle, regardless of whether they choose to lease another vehicle from the same lessor, purchase the leased vehicle, or explore other options.

Examples: Suppose you have leased a car for three years, and your lease agreement includes a Disposition Fee of $400. As the lease term concludes, you return the vehicle to the lessor. The Disposition Fee is then charged to cover the administrative costs associated with processing the returned vehicle.

Whether you decide to lease a new vehicle, purchase the current leased vehicle, or explore other options, the Disposition Fee remains a consistent charge. For example, if you choose to lease another vehicle from the same lessor, you would be required to pay the Disposition Fee in addition to any new fees associated with the new lease.