Jargon Buster | Car leasing made simple™

a

Advance rental

An Advanced Rental is an initial rental / deposit payable at the start of the contract.

Agency fee

Is the amount of money payable on set-up of an Agency Contract.

Agent

See "Broker"

Agreement

See "Documents"

Amortisation

The process of paying off a debt liability and accrued interest by regularly paying a series of equal amounts, e.g. when you pay off a mortgage or car loan.

Approval

Acceptance by a finance company / funder to provide funding.

APR

The Annual Percentage Rate

Arrangement Fee

This is a one off fee, often charged by finance companies for the administration and set-up of an agreement. The fee is generally payable on signing of the Finance Documents.

Asset

Anything owned that has commercial value. It can be financial in nature (money, stocks, bonds, shares, invoices, securities), physical (buildings, machinery, cars, land), or qualitative (qualities, skills, things of great intrinsic value).

Authority

Authority is given when the finance company confirms that all the necessary documents are in place and that the vehicle can be delivered to the end user.

Automatic

An automatic vehicle has a transmission that automatically changes the gears according to the speed of the car.

b

Balloon Payment

This is the final figure payable on some finance agreements (often a guaranteed value, please see "GMFV").

Bankruptcy

When an individual or company has reached the point of being totally incapable of repaying debts. When this happens to a company they will go into Administration followed by liquidation or receivership.

BIK

Benefit in Kind. This is calculated on the vehicle's 'List Price' (for tax purposes) and includes VAT, the list price of any options including VAT and the manufacturer's delivery charge on the day before the vehicle is registered. This figure is provided to the customer to assist them in their reporting to the tax office and is used to assess the amount of tax a driver will pay as a result of having a company car.

Brake Horse Power

Also known as 'bhp'. Bhp is the measure of an engine's horsepower without the loss in power caused by the gearbox, generator, water pump, and other auxiliary components such as alternator, power steering pump etc.

Breakdown Recovery

A mobile repair and collect service; for instances when the vehicle will not start or has broken down either at home, on a road or motorway, or when travelling abroad. Generally, most new cars have breakdown cover as part of the warranty package which is generally offered on vehicles less than 3 years old.

Broker

A broker is a party that mediates between the buyer, seller and supplier.

Budget

A budget is a list of expenses allocated for spending.

BVRLA

British Vehicle Rental and Leasing Association. As a Member you will be able to access detailed information and some of the many services especially developed to help you manage your business more effectively and efficiently. It is also the governing body of the leasing and rental industry assisting not only its members but the consumers too.

c

CAP

CAP (part of Emap Ltd) provides the motor industry with used and future residual value data, new vehicle data, technical information and asset management support systems.

CAP ID

A CAP ID is a unique vehicle code/ identifying number provided by CAP; an industry leading vehicle data provider.

Car allowance

Payment made by a company to an employee in lieu of a company car. Normally paid monthly through PAYE and is broadly equivalent to the leasing cost of the car.

Capital

Money or valuable assets which if invested can grow in value or generate an income.

CCA

Consumer Credit Act. Enacted in 1974 to protect individuals, unincorporated companies (i.e. not limited) and partnerships where credit does not exceed Â£25,000. (Referred to as a regulated agreement).

CCJ

A County Court Judgement recorded against a person or organisation e.g. for non-payment of debt.

Cherished Plates

Often known as a personalised number plate. Different plates can be assigned to different vehicles (often specific to the individual driver or organisation).

City car

A city car is a small, moderately powered vehicle.

Class

The class of a vehicle defines its main use, status or style i.e 4x4 or convertible.

CO2

Abbreviation for Carbon Dioxide. The amount of CO2 a car emits in g/km is used to calculate how much company car tax and Road fund License it attracts.

Collection

Collection is the term used when your contracted vehicle is collected from you and returned to the funder.

Commission

This is the fee payable to a broker to cover the cost of executing and settling a transaction or sale.

Contract

This is the agreement between you and the finance house which stipulates the terms of the agreement.

Contract Hire

An 'Off Balance Sheet' funding method where an organisation leases a vehicle for a specified period and makes regular monthly payments. The finance company retains ownership of the vehicle. At the end of the contract period, the vehicle is returned to the finance company and disposed of and the finance company is responsible for the associated risks in depreciation etc.

Contract Mileage

An agreed annual mileage over the term of the contract.

Contract Months

An agreed period of time that the contract will be in effect.

Contract Purchase

An 'On-Balance-Sheet' funding method where an organisation leases a vehicle for a specified period and makes regular monthly payments. The organisation / driver has the ability to purchase the car at the end of the contract for a predetermined amount i.e. balloon figure / guaranteed value.

Contract Type

This determines the kind of agreement entered into between a customer and a finance house.

Convertible

Convertibles are vehicles with retracting roofs. With doors commonly reduced from 4 to 2.

Coupe

Coupes are often hard-topped sports cars or sporty variants. With doors commonly reduced from 4 to 2.

County Court Judgement

See "CCJ"

Credit Score

A Point system used by finance companies in assessing clients Credit Rating to establish affordability.

Credit Search

A credit check carried out by a finance company to check your past and current credit record. This will also provide details of your Credit Score.

Creditor

The counterparty of a debtor.

d

Daily Rental

A short term rental of a vehicle. Daily Rental is often used on a day to day basis as and when required.

Damage

Damage describes imperfections resulting from accident / misuse.

Dealer

See "Supplying Dealer"

Debtor

Is an entity that owes a debt to someone else. The entity may be an individual, a firm, a government or a company.

Decline

Refusal by a finance company to provide funding due to Credit Search and Credit Score results.

Delivery Note

A document recording the delivery of a vehicle to a customer / organisation. The customer is required to sign this to confirm condition and mileage.

Delivery plus 1Â®

Delivery Plus 1 is the service arm of our parent company Automotive Finance & Leasing (UK) Ltd (AFL) and offers a full range of customer service for both customers and partners throughout the lifetime of a contract.

Dependants

People who are financially dependent upon another person.

Deposit

The amount of money paid upfront towards the contract. See "Initial Rental".

Depreciation

The loss in value of a vehicle over the life of the contract. This is the difference between the original purchase price and the sale price at the end of contract.

Diesel

Diesel or diesel fuel in general terms is any fuel used in diesel engines. The most common is a specific fractional distillate of petroleum fuel oil.

Direct Debit Mandate

Direct debit is a payment system that allows an organisation to instruct their bank to collect varying amounts directly from the customer. A signed Direct Debit Mandate is the customer's instruction to allow this transfer to take place.

Directors Guarantee / Guarantor

During the underwriting process a finance company can call on Directors to give their personal guarantee. This will in some cases satisfy the finance company resulting in approval of the lend.

Derivative

The derivative of a vehicle is its unique identifying type i.e 1.9 Tdi SE Auto / 1.7 Cdti Style.

Documents

Documents are legal agreements between two parties detailing the terms of the contract.

Driving Licence

An official identification document giving permission to allow the holder to drive a vehicle. Further permissions are required to drive vehicles such as HGV's.

Due to Dealer

Due to dealer is a term used by the supplying dealer as an estimated date that the vehicle is due into the dealership.

e

Early Termination

Early Termination is instructing the funder to end your lease prematurely or before the scheduled End of Contract date. The lessee will typically be required to pay an early termination charge as detailed in their contract.

Employee Benefits

Benefits provided by an employer generally as an incentive. Such as a company car allowance and an employee pension scheme.

End of contract (EOC)

When your vehicle contract is coming to an end, you have a range of options varying from funder to funder:

Renew - return and replace the vehicle by taking a new contract.

Extend - extend the agreement on the existing vehicle for a further period.

Purchase - we can negotiate on your behalf so that you, your family, friends or colleagues can purchase the vehicle at the End of Contract.

Collection - we will arrange to collect your vehicle at the End of Contract

Equity

The value of the vehicle less any outstanding finance.

Estate

An Estate vehicle (sometimes known as a Touring) is generally more spacious behind the rear seats and consists of 5 doors.

Excess Mileage Charge

The amount of money per mile to be paid when the contract mileage has been exceeded.

Excess Wear and Tear Charge

An additional charge levied by the finance company to rectify damage.

Extension

Extend the agreement on the existing vehicle for a further period.

f

Factory Fitted Options

Factory fitted options are upgrades that can be made at extra cost to a standard vehicle specification; these upgrades are applied during the manufacturing process.

Finance Rental

The rental element, which covers the finance part of the rental only.

Financial Services Authority (FSA)

This is an independent governmental body given statutory powers by the Financial Services & Markets Act 2000. It regulates the financial services industry in the UK.

First Registration Fee

Designed to cover the administrative costs associated with registration of the vehicle throughout its life. The government levies this on all new vehicles.

Fleet

Fleet is the term used to describe a group of vehicles.

Flyer

Is an advert for a specific deal; usually sent in an email format intended for distribution through the partner- network and to our own customer base.

FOC

Free Of Charge - something for nothing!

Formal extension

Also known as Secondary Period. When a customer enters into an extended contract for a set period of time. Generally this type of extension is for 3 months or more.

Franchise

Authorisation from one organisation to another enabling the sale of goods and services generally in a specific geographical location. In some cases there are specific guidelines that must be followed by the parent organisation.

Fuel

A substance that can be consumed by a vehicle to produce energy.

Funder

Another name for the Finance company. The funder is used to provide funds for the lease or hire of a vehicle.

g

GAP Insurance

GAP or Guaranteed Asset Protection is an insurance product protecting the borrower in the event of a vehicle being written off or stolen. The payment made by GAP Insurance covers any shortfall there may be between the finance company and the car Insurance company when settling the outstanding finance.

Gear Box

The transmission of the vehicle.

GMFV / GFV

Guaranteed Minimum Future Value / Guaranteed Future Value.

Grey fleet

Grey Fleet refers to any business miles driven by employees in their own vehicles that is claimed back at a fixed mileage rate by the employee.

Guarantor

A person, or organisation, that gives a guarantee / a surety that funds will be paid back to the funder.

h

Handbook

A comprehensive guide to your vehicle, which contains information such as operating instructions and emergency contact information.

Hatchback

Hatchback is a vehicle which allows access from behind the vehicle generally by a single / top-hinged tailgate or large flip-up window. The vehicle commonly has two rows of seats, with the rear seat able to fold down to increase load space.

Hire Purchase

Hire Purchase combines elements of both a loan and a lease. Often a Hire Purchase agreement consists of an initial deposit followed by monthly payments over an agreed period of time. On conclusion of the monthly instalments you will own the vehicle outright.

Hirer

See "Lessee"

HP

See "Hire Purchase"

HPI

HPI refers to a database of information to ensure that the vehicle has no outstanding finance, has the correct number of registered keepers, its origin and confirms the actual mileage. Generally HPI is used prior to the sale or transfer of a vehicle.

Holding Company

A parent company of a group of companies, or a company that controls a subsidiary company.

Hybrid

A vehicle powered by both an internal combustion engine and an electric motor.

i

Income

Money received from employment (earned income) or investment (unearned income).

Initial Rental

Initial Rental is the deposit which makes up the first monthly payment.

Inspection

An examination or evaluation exercise of the vehicle. Generally carried out at the end of contract.

Insurance Group

The insurance group of a vehicle is a number (sometimes with a letter suffix) given to determine the cost of insurance. A vehicles insurance group rating is determined by its cost, performance (0-60mph and top speed), parts costs and security levels.

Introducer

See "Broker"

IPT

Insurance Premium Tax payable on all Insurance premiums.

j

Jargon

Terminology / language used within a specific industry.

Joint Application

Finance applied for by more than one party.

Joint Venture

An association of companies or individuals to jointly explore finance or direct an initiative for mutual benefit. The different participants may have different shares in the joint venture, resulting in different levels of profit or loss.

k

Keys

A key is a device which is used to open a lock. A typical key consist of two parts: the blade, which slides into the keyway of the lock and distinguishes between different keys, and the bow, which is left protruding so that torque can be applied by the user.

l

Lead Time

The length of time advised when ordering a vehicle to estimate it's due to dealer date and delivery date.

Lease

A type of agreement set over a specific period of time with regular payments.

Lessee

The organisation or individual who have leased the vehicle.

Lesser

The lesser is the finance company leasing you the vehicle.

Licence

See "Driving Licence"

Liquidation

The winding up of a company no longer in a position to meet its debts or which otherwise wishes to cease trading. When the company's debts have been paid, any assets left over are eventually distributed among the shareholders.

m

Maintenance

An optional product which can be added to your contract. Should a lessee choose to opt for a Maintenance contract this would include; Servicing and Tyres.

Make

The Make of the vehicle represents its Manufacturer i.e. Ford / Vauxhall.

Manufacturer Warranty

A warranty offered on new vehicles by the manufacturer.

Max Power

The Brake Horse Power / bhp levels of a vehicle.

Mileage Allowance

The total amount of miles permitted as per terms of the contract.

Model

The Model represents the unique vehicle identifier i.e. Fiesta / Zafira.

Money Laundering

A process whereby money generated by criminal activity is run through a series of financial transactions to hide the original source.

Monthly Rental

Is the agreed monthly payment made to the finance company.

Mortgage

A loan to help you buy property, typically a house or flat. The property is used as security (collateral) for the loan until you have fully repaid it. There are usually established payment periods and interest rates (mortgage rates) applied.

MOT

The MOT scheme is monitored by the Vehicle and Operator Services Agency (VOSA). It is required by law that all vehicles which are more than three years old will need an MOT each year to ensure that they comply with at least the minimum road safety and environmental standards.

MPV

Is the term used to describe a multipurpose vehicle.

MRP

Manufacturers Recommended Price.

Multitronic

Multritronic is a stepless transmission.

n

Nearly New

A vehicle that may have been used for a short period of time but is not considered old.

Nominal

An unadjusted rate, value or change in value. This type of measure often reflects the current situation, such as the current price of a car, and doesn't make adjustments to reflect factors such as seasonality or inflation, which provide a more accurate measure in real terms.

o

On The Road Price

Cash price of the vehicle including registration fees etc.

Order Form

An Order Form is a signed agreement between the seller and the purchaser instructing the seller to proceed with the contract.

p

P11d

The P11d value is used by both company car users when calculating their own company car taxation and the Inland Revenue for taxation purposes.

PDI

Pre-Delivery Inspection is carried out before the delivery of any new vehicle to ensure that it meets the standards required by the Manufacturer.

PCH

Personal Contract Hire is a funding method where an individual hires a vehicle for a specific period and makes regular monthly payments. The finance company retains ownership of the vehicle. At the end of the contract period, the vehicle is returned to the finance company and disposed of and the finance company is responsible for the associated risks in depreciation etc.

PCP

Personal Contract Purchase a funding method where an individual hires a vehicle for a specific period and makes regular monthly payments. The organisation / driver has the ability to purchase the car at the end of the contract for a predetermined amount i.e. balloon figure / guaranteed value.

Payment Profile

This determines the rentals and the frequency of payments made to the finance house.

Peppercorn Rental

This type of rental is commonly used at the end of a Finance Lease Agreement and is often a small annual payment, to confirm use of the asset.

Personal leasing

Personal Leasing is funding method where an individual leases a vehicle for a specific period and makes regular monthly payments.

Petrol

Petrol in general terms is fuel used in engines.

PLC

Public Limited Company. A Company whose obligations to creditors are limited by shares and who has fulfilled the legal requirements to attain public status (this does not necessarily mean their shares are tradable by the public).

PPM

Pence Per Mile.
See "Excess Mileage Charge".

Principals

This is generally a term used to determine the importance of a person within an organisation.

Property Status

Property Status describes the type of agreement you have on your property e.g. freehold, leasehold or renting etc.

Proposal Form

A Proposal Form is an application form used to collect necessary information from an applicant so that they can be underwritten for finance.

Purchase Price

A Purchase Price is the price given by a finance company to purchase the vehicle at end of contract.

q

Quote / Quotation

An estimate of the monthly finance cost of a vehicle based on such factors as the vehicle, contract type, contract length and mileage.

r

Referred

A finance company may refer your application for finance and request supporting information such as bank statements or utility bills. This information is used to support your Credit Search and Credit Score.

Referrer

See "Introducer"

Registered Name

A unique name under which a company has been registered.

Registered number

A registered identification number or RN is a number issued by Companies House also known as a Company Registration number.

Registration number

The registration number is a unique seven character code given to every vehicle by the DVLA. The first two letters denote where in the country the vehicle was registered, the two numbers indicate when the vehicle was registered, and the last three letters are randomly generated to give unique identification.

Renewal

A Renewal is the replacement of your current contract.

Replacement vehicle

A substitute vehicle provided on a like-for-like basis.

Residual Value

This is the figure used to predict the vehicles value after a period of time.

RFL

Vehicle excise duty (commonly referred to as "road fund licence" or "road tax").

Roadside assistance

See "Breakdown Recovery"

s

Salary

Generally paid either once a month or weekly by bank transfer or cheque for duties served to an organisation.

Sale and Leaseback

Purchasing an asset / vehicle which is then funded and paid back on a monthly / quarterly basis.

Saloon

A Saloon is generally a 4 door vehicle with a separate boot compartment and often can sit up to 5 people.

Scheduled Delivery

An estimated date agreed by the delivery agents to deliver the vehicle.

Self-Regulation

The process by which financial services organisations became responsible for overseeing and policing their own industry under the Financial Services Act 1986, through a network of self-regulatory organisations (SROs).

Service / Servicing

A motor vehicle service is a series of maintenance procedures carried out at a set time / interval or after the vehicle has travelled a certain distance. The service intervals are specified by the vehicle manufacturer in a service schedule and some vehicles display the due date for the next service electronically on the instrument panel.
The completed services are usually recorded in a service book which is 'rubber stamped' by the service centre upon completion of each service.

SMMT

The Society of Motor Manufacturers and Traders is the trade association for the United Kingdom motor industry.

SMR

Service Maintenance & Repair

Spare Key

An additional key provided with the vehicle.

Status

Status is associated with standard contract-hire terms; non-status applies to new start companies, adverse credit and/or limited accounting information.

Sub-Broker

A partner / referrer of business issued with an amount payable for introducing business.

Supplying Dealer

A Supplying Dealer is a business that sells new and used cars. Usually open to the general public and often has a forecourt displaying current vehicles on sale.

t

Tax Year

The Tax Year runs from the 6th of April one year to the 5th of April the following year. The Tax Year is governed by the Inland Revenue.

Term

Term is the phrase used to describe the contract length.

Terminal Pause

A two month lapse at the end of an agreement before the vehicle is either returned or acquired.

Termination

Termination generally refers to the Contract End date. Termination of a contract can either be at the natural end of the contract or throughout the duration of the contract by terminating in advance.

Tracker

A system added to high value vehicles in order to prevent and protect them from thieves and criminal damage.

Transmission

Also known as a 'Gear Box'.

Turnover

The value of sales of an organisation over a period of time.

u

Underwriting

Underwriting refers to the process that funders use to run a series of checks and assess the eligibility of a customer to receive funding.

Umbrella

Usually found in the load space of your vehicle. Not generally provided as standard.

v

VOSA

Vehicle & Operator Services Agency. The body ensuring safer roads and vehicle conditions.

V5

The V5 registration document is issued by the DVLA. It gives the name and address of a vehicle's current owner as well as the last two registered keepers. It also lists the car's colour, make, model, engine number, and vehicle identification number.

VE103

A VE103 is a certificate giving permission to travel abroad. This documentation is required when any rental or leased vehicle is taken out of the country.

VAT

Value Added Tax, or VAT, is a tax charged on most business-to-business and business-to-consumer transactions in the UK. VAT is also charged on goods, and some services, imported from places outside the European Union (EU) and on goods and some services coming into the UK from other EU countries. VAT is charged to a buyer by a VAT-registered seller. It is reclaimed by a VAT-registered buyer after goods and services are purchased.