Reconditioning Reserve

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DEFINITION of 'Reconditioning Reserve'

A type of deposit paid by one who leases a vehicle. The reconditioning reserve acts as a deposit against any damage outside of normal wear and tear. If the vehicle is returned in acceptable condition, the entire reconditioning reserve would be returned. If the vehicle needs to be repaired or reconditioned, a portion or the entire reconditioning reserve would be applied to cover the expenses.

INVESTOPEDIA EXPLAINS 'Reconditioning Reserve'

A reconditioning reserve on a vehicle lease is similar to a security deposit paid by someone renting an apartment. In either case, the money is intended to offset expenses incurred by the owner of the property for damage that occurs outside of normal wear and tear. Some states have laws that describe what should be considered normal wear and tear; these laws protect renters from unnecessary charges.

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