Leasing Jargon Buster

An initial payment made at the beginning of a lease, typically calculated as a multiple of the monthly payment, aimed at reducing subsequent monthly costs.

An optional payment at the end of a finance agreement, such as a Personal Contract Purchase (PCP), which allows you to either purchase the car or return it.

A type of lease designed for businesses, allowing them to lease vehicles for business use, often with VAT benefits and potentially lower monthly payments.

The British Vehicle Rental and Leasing Association, which regulates leasing companies and sets standards for fair wear and tear.

‘Value added tax’ is currently at a rate of 20% and payable on top of all business lease prices. Lovely.

The amount of carbon dioxide a vehicle emits, affecting company car tax and environmental impact assessments.

Legislation that provides legal protection for consumers in credit agreements, ensuring transparency and fairness.

A leasing arrangement where a vehicle is leased for a set period with fixed monthly payments, without the option to purchase the vehicle at the end.

Similar to contract hire but with an option to purchase the vehicle at the end of the term, usually involving a balloon payment.

The decrease in a vehicle's value over time, a key factor in calculating lease payments, as lessees pay for the car's depreciation during the lease term.

Fees charged if you exceed the agreed-upon mileage limit in your lease contract, typically calculated on a per-mile basis.

The acceptable level of wear on a leased vehicle as defined by guidelines, such as those from the BVRLA, to avoid additional charges at lease end.

A type of lease where the lessee bears the risks and rewards of ownership, commonly used for business leasing.

The total cost of the vehicle including any additional fees and taxes that are rolled into the lease, used to calculate monthly payments.

Insurance that covers the difference between the vehicle's value and the remaining lease payments if the car is declared a total loss or stolen.

A finance arrangement where you make monthly payments and own the vehicle at the end of the agreement after all payments have been made.

Also known as the initial rental, this non-refundable upfront payment reduces your monthly lease payments.

Fees due at the start of a lease, which may include the initial payment, deposit, and any administrative fees.

The start date of the lease agreement when you take delivery of the vehicle.

The duration of the lease agreement, typically ranging from 24 to 48 months.

The individual or business that leases the vehicle.

The leasing company or financial institution that owns the vehicle and provides it to the lessee under a lease agreement.

The maximum number of miles you can drive annually without incurring excess mileage charges, specified in the lease contract.

A decimal number used to calculate the interest portion of your monthly lease payment, roughly equivalent to the interest rate.

A type of lease agreement for personal use, similar to Business Contract Hire but designed for individuals.

The estimated value of the vehicle at the end of the lease term, which influences monthly lease payments.

A guideline, often provided by the BVRLA, that outlines acceptable vehicle conditions and what constitutes excess wear and tear at the end of a lease.

This is the lease company who own the car and your lease agreement is with.

A payment profile is used to calculate the deposit and lease term, for example, a common profile is 3+35. This tells us it is 36 months long with an initial rental of the equivalent of 3 months.

This is the time it’ll take for the car to arrive at the dealership. ‘The lead time is 12 weeks’ for example.

‘Miles per gallon’ – how many miles the car should travel per gallon of fuel.

This is another name for road tax!

‘Break Horsepower’ or ‘Pferdestrke’ (which means ‘horse strength’ to you and me) is a measure of power available at the shaft of an engine.