The leasing industry is awash with jargon and acronyms! We want to be as transparent as possible so we've put together a handy glossary to help you out.
As part of your leasing contract you will agree to stick to an annual mileage limit. This is because the mileage you do is closely linked to the depreciation of the vehicle and the monthly fee you pay is for the depreciation of the vehicle over time. The annual mileage is normally anything from 5,000 to 50,000 miles per year.
A feature of business contract purchase and personal contract purchase, this is a final payment that is agreed at the start of the contract but not made until the end. The payment is of higher value than your regular payment charges and once paid, you take ownership of the vehicle.
A business contract hire agreement allows you to lease a vehicle for a set period of time which is typically between 24 and 60 months. During that time you pay an agreed monthly fee and the vehicle is then returned at the end of the term.
With business contract purchase you pay a fixed monthly payment with the option to buy the vehicle at the end of the contract term. Alternatively, you can part exchange the vehicle for a new one using any equity for the deposit, or you can hand the vehicle back to AMT (subject to mileage and condition).
This option is similar to hire purchase, the difference being that an agreement to purchase the vehicle at the end of the term is made in advance, with no option for the purchaser to change their mind at the conclusion of the term.
The BVRLA is the trade body for the vehicle rental and leasing sector. It seeks to look after the interests of, and sets standards for operational quality for both the contract hire and leasing sectors and the daily rental sectors.
Mileage covered that is additional to that agreed in the contract. It always results in a charge to cover the additional servicing and depreciation costs it generates.
Fleet management refers to a service which helps to minimize the risks associated with vehicle investment, improve efficiency, productivity and reduce overall transportation costs. If you need six or more vehicles for your business, we can offer you a fleet management solution. Just get in touch today.
A funder is an organisation that provides finance for vehicles. We have partnerships with 7 finance companies so we can remain impartial and have a choice between funders when it comes to securing finance on your lease.
Guaranteed asset protection or GAP insurance is a financial product often sold if you buy or lease a brand-new car. If your car is stolen or written off (total loss), GAP insurance covers the difference between the current value of the car (the amount your car insurer will usually pay out) and the amount of outstanding payments you still owe.
Hire purchase is a finance option for business and personal leasing customers. A deposit payment is agreed – typically a multiple of the monthly payment – and repayments will be calculated based on this figure, the value of the vehicle, and the length of the repayment term. Once all the repayments have been completed, the business will become the legal owner of the vehicle.
This is your first payment for your leased vehicle. It is usually calculated as 1, 3, 6, 9 or 12 months of your monthly rental. The higher the initial payment, the lower your subsequent monthly rental payments will be.
Lease purchase is a similar finance agreement to hire purchase, the difference being that at the end of the contract, you can either make a balloon payment and take ownership of the vehicle, or you can choose to part exchange your vehicle – you make the balloon payment then lease a newer car.
Maintenance is an optional additional monthly cost that covers you for servicing, replacement tyres and all costs associated with mechanical and electrical repairs as well as bulbs, batteries, exhausts and so on. Maintenance packages are available to both business and personal leasing customers.
All of our lease vehicles come with a manufacturer warranty which can range from 1 to 5 years. The warranty covers anything that is considered to be a manufacturing defect.
Personal contract hire is also known as personal leasing. It works in the same way as business leasing but the prices are generally slightly more expensive as they include VAT. You pay a monthly rental to lease a car over a set period of time, typically between 24 – 60 months, with a flexible initial payment structure of either 1, 3, 6, 9 or 12 months which is paid after delivery. The vehicle is then returned at the end of the term.
Personal contract purchase is similar to personal contract hire (as you pay a monthly rental to lease a car), however you also have the option to purchase the vehicle at the end of the contract by paying a ‘balloon payment’. The amount of the balloon payment is agreed at the beginning of your contract
The processing fee is an administration charge/set up fee that is implemented to cover the cost of processing the finance application & dealing with the contract documentation.
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