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
How many months the contract runs. Short-term work generally spans 1 to 24 months; conventional leasing starts around 24 and runs to 48.
Balloon payment
The lump sum sitting at the end of products like PCP, there to hold the monthly figure down. Nothing of the sort exists on a lease or subscription with us — the vehicle goes back and that is the end of it.
Benefit in kind (BIK)
What an employee is taxed on when a company vehicle is available for private use. The charge is driven by list price and CO₂ output, which is why an electric car costs a driver so much less in tax than its petrol equivalent.
Broker
A middleman placing your business with a funder or a supplying fleet. We are both broker and supplier — a large share of what you see on this site is metal we hold ourselves.
Business contract hire (BCH)
Leasing in the company name. Quoted without VAT, and a VAT-registered business can typically recover half of it on a car, all of it on a van, depending on use.
Car subscription
One monthly figure covering the vehicle, its servicing, road tax, warranty and recovery cover, with a short minimum commitment and a rolling arrangement afterwards. Insurance and fuel remain yours.
Contract hire
Leasing, under its proper name. You buy the use of a vehicle for an agreed period and mileage and give it back at the end. Ownership never passes to you.
Delivery and collection
Moving the vehicle to your door at the start and away again at the finish. We cover mainland Britain; the charge follows your postcode and is written down before you commit.
Excess mileage charge
The pence-per-mile rate applied to anything driven beyond your allowance. Quoted before you sign, so the cost of overrunning is never a surprise.
Fair wear and tear
The BVRLA's published yardstick for acceptable condition at handback. Our short-term vehicles are measured against our own return standards instead — unless one is kept past 18 months, at which point the BVRLA standard governs.
Flexible lease
A lease with a short commitment at the front, often three months, that then continues month to month on notice. It lets you leave or stay without a penalty for either.
Funder
The finance house that owns the car through a conventional lease. On much of our short-term business no funder is involved, because the vehicle is ours.
Initial payment / initial rental
The bigger payment that opens an agreement, expressed as a multiple of the monthly rental. It is rent paid early rather than a deposit, and none of it returns to you. A refundable deposit, if the underwriters ask for one, is an entirely separate sum.
Lead time
The wait between order and delivery. Stock we already hold can be with you inside a week; a factory build is measured in months.
Long-term car hire
Daily rental stretched across months. Easy to set up, and dearer per month than a lease once you are past a few weeks.
Maintenance package
Servicing, tyres and mechanical repair rolled into the rental. Standard on subscriptions and flexible agreements, an option on most fixed short-term leases. Tyre cover extends to reasonable wear only — damage is excluded, and heavy wear is charged.
Mileage allowance
The mileage you have paid for. Short agreements express it monthly, such as 1,500 miles a month; longer ones use an annual figure.
Non-status leasing
An application that falls outside a funder's automated criteria — a young company, an overseas parent, foreign directors, no British credit record. A credit search still happens. What changes is that an underwriter reads the case instead of a system rejecting it.
P11D value
A car's list price with VAT and delivery included but road tax and first registration excluded. It is the number benefit-in-kind is calculated from.
Personal contract hire (PCH)
Leasing in your own name rather than a company's. Quoted with VAT included, and none of it is recoverable.
Personal contract purchase (PCP)
Finance carrying an optional payment at the end that transfers ownership. It can finish with the car being yours, at the cost of tying you in for several years.
Rolling contract
An agreement that keeps going month by month once the minimum term has passed, until one side calls time. Ours needs 5 working days' notice to return, subject to availability and blackout periods.
Road fund licence (RFL)
Vehicle Excise Duty — road tax. Covered for the life of every subscription and short-term lease we write.
Salary sacrifice
Swapping part of gross pay for a car, which spares the employee income tax and National Insurance. It works hardest with electric vehicles thanks to their low benefit-in-kind rate.
Short-term lease
Fixed contract hire of roughly 3 to 24 months, occupying the ground between daily rental and a conventional three-year lease.
Subject to status
Shorthand for “this depends on the credit assessment”. Nearly all vehicle finance carries the phrase; working around that assessment is precisely what our specialist services exist to do.
Next step
Still confused by something?
Ask us. There are no daft questions in vehicle finance — the language is deliberately opaque.