DEFINITION of 'Lease Rate'
The amount of money paid over a specified time period for the rental of an asset, such as real property or an automobile. The lease rate that the lender earns from allowing someone else to use his property compensates him for not being able to put that property to another use during the term of the lease.
BREAKING DOWN 'Lease Rate'
In commercial real estate, the lease rate is commonly stated as a dollar amount per square foot of space per year. To get a true idea of the cost of renting a space, in addition to the lease rate, the potential tenant will need to know if the lease is single, double or triple net. In other words, whether it is he or the property owner who will be responsible for expenses such as utilities, maintenance and property taxes.
In the case of an automobile lease, the monthly payment on the vehicle is based on the car's expected depreciation and residual value (a predetermined amount that the car will be worth at the end of the lease term) as well as the lease rate, which is usually stated as a percentage. Through monthly payments, the lessee compensates the automobile dealer for both the vehicle's depreciation and for tying up assets in vehicles instead of investing that money elsewhere.