Reference
Car leasing glossary
Every term you will meet in a leasing quotation or contract, explained without jargon. Bookmark it — it is more useful than it sounds.
Definitions
Leasing terms A–Z
If a word in your quotation does not appear here, ask us and we will add it.
Agreement term
The number of months your contract runs for. Short-term agreements typically run from 1 to 24 months, against 24 to 48 months for conventional leasing.
Balloon payment
A large final payment used in some finance products (such as PCP) to keep monthly costs down. Short-term leases and subscriptions have no balloon payment — you simply hand the vehicle back.
Benefit in kind (BIK)
The tax an employee pays on a company car made available for private use. The rate is based on the vehicle's P11D value and CO₂ emissions, so electric cars attract a far lower charge than petrol or diesel.
Broker
A company that arranges vehicle finance or rental between you and a funder or supplying fleet. We are a supplier as well as a broker — many vehicles come from our own fleet.
Business contract hire (BCH)
A lease taken in a company's name. Prices are quoted excluding VAT and VAT-registered businesses can normally reclaim 50% of the VAT on a car and 100% on a van, subject to use.
Car subscription
An all-inclusive monthly agreement covering the vehicle, maintenance, servicing, road tax, warranty and breakdown cover, usually with a short minimum term and a rolling notice period afterwards. You add insurance and fuel or charging.
Contract hire
The formal name for leasing. You pay to use a vehicle for an agreed term and mileage, then return it. You never own the vehicle.
Delivery and collection
Getting the vehicle to you and taking it back at the end. We deliver nationwide; charges depend on postcode and are confirmed in writing before you commit.
Excess mileage charge
A pence-per-mile charge applied if you exceed your contracted mileage. It is quoted up front, so you can always work out the cost of going over.
Fair wear and tear
The industry standard published by the BVRLA for acceptable condition on return. Short-term vehicles are assessed against our own return standards instead. BVRLA fair wear and tear applies only where a vehicle is kept beyond 18 months.
Flexible lease
A lease with a short minimum term — often 3 months — that then rolls on a monthly basis with a notice period, letting you extend or exit without a penalty.
Funder
The finance company that owns the vehicle during a lease. On short-term agreements the vehicle is often owned by our own fleet instead.
Initial payment / initial rental
The first, larger payment at the start of an agreement, quoted as a multiple of the monthly rental. It is rental paid up front, not a deposit, and is not refundable. Separate from this, a refundable deposit may also be required subject to status.
Lead time
How long until the vehicle can be delivered. In-stock short-term vehicles can often be with you inside two weeks, against months for a factory order.
Long-term car hire
Daily rental extended over months rather than days. Simpler to arrange than a lease but usually more expensive per month over anything longer than a few weeks.
Maintenance package
Cover for servicing, tyres and mechanical repairs. Included as standard on subscriptions and flexible agreements. On a fixed short-term lease it is not standard, but is optional on most. Where tyres are covered, cover is for reasonable wear only — accidental damage is excluded and excessive wear is chargeable.
Mileage allowance
The mileage you contract for, usually expressed per month on short agreements (for example 1,500 miles per month) or annually on longer ones.
Non-status leasing
An agreement for an applicant who falls outside a funder’s standard credit criteria — a new company, an overseas parent, foreign directors, or no UK credit history. A credit check is still run; the difference is that specialist underwriters assess the case individually rather than a system declining it automatically.
P11D value
The list price of a car including VAT and delivery but excluding road tax and first registration fee. Used to calculate benefit-in-kind tax.
Personal contract hire (PCH)
A lease taken in an individual's name. Prices are quoted including VAT and there is nothing to reclaim.
Personal contract purchase (PCP)
A finance product with an optional final payment that lets you buy the vehicle. Unlike leasing, it can end in ownership — but it commits you for years.
Rolling contract
An agreement that continues month to month after a minimum term until either side gives notice. Our notice period to return a subscription or flexible lease is just 5 working days, subject to availability and blackout periods.
Road fund licence (RFL)
Vehicle Excise Duty, or road tax. Included for the duration of every subscription and short-term lease we supply.
Salary sacrifice
An employee gives up part of their gross salary in exchange for a car, saving income tax and National Insurance. Most effective with electric vehicles because of the low benefit-in-kind rate.
Short-term lease
A fixed-term contract hire agreement of typically 3 to 24 months, bridging the gap between daily rental and conventional leasing.
Subject to status
The agreement depends on a credit assessment. Almost all vehicle finance is subject to status; the assessment is what our specialist services are designed to work around.
Next step
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