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3+23

3/ determines the initial payments payable as a deposit, 23 determines how many monthly payments remain payable.

Acceptance fee

Usually paid by the customer at the start of a finance agreement, with the first rental payment.

Accessories

This illustrates the monthly cost of a chosen extra which can be added to the specification of a vehicle.

Application fee

Fees usually charged by Finance/Leasing Company on signing a finance agreement.

Administration fee

A fee charged to cover the cost of processing or changing an order within an agreement.

Agreement/document

A legally binding contract made between; a customer and a financial company for the purchase or use of a vehicle. The agreement is binding once it is signed on behalf of the financial company.

APR

The interest rate what you pay on a finance agreement. When financing a vehicle. Annual Percentage Rate.

Balloon payment

A term used referring to the final payment of a Finance agreement, payable at contract-end on some types of finance agreements.

Consumer Credit Licence

CCL. To comply with the law finance businesses must have a credit licence to carry out certain activities in the field of credit and hiring.

Contract Hire

This is a finance agreement where the customer pays for the use of the vehicle and simple hands vehicle back at lease end.

Contract type

These are the choice of contracts available from Finance/Leasing companies; H.P/Finance Lease/ Contract Hire/ P.C.P/ Contract Purchase.

Credit amount

This is the amount of money you borrow, calculated by the cash price of the car and deducting any deposit that is being put down.

Customer

The company, firm, individual or undertaking named in a finance agreement.

Deposit

This is the amount of money which has been elected to pay upfront. The higher the deposit you choose to pay, the cheaper the payments will be.

Depreciation

A reduction or decline in the vehicle value over the lease term caused by condition, age and mileage.

Early Termination

The termination of a lease before the lease end date.

Early Termination Insurance

An insurance policy designed to provide cover that will pay off any penalties from Finance/Leasing Companies if you have to end your agreement early, this in return provides cover up to a maximum of £5000 as a result of resignation, redundancy, expatriation, death and maternity.

Excess Mileage Charge

This is a charge based on miles driven over the amount contracted in the lease agreement on return of the vehicle, the amount is calculated by taking the excess mileage rate of the vehicle and multiplying it by the number of miles covered over the above contracted miles agreed.

Excess Mileage

At the end of an agreement the miles covered is over and above the miles originally specified on your quotation and finance agreement.

Excess Wear and Tear

This is if the vehicle is damaged beyond what is normally expected in a contract term of a vehicle, charges are applied by the finance company and examples of excess wear are ripped interior, damaged or broken parts, interior and exterior panel damage etc.

Final Rental/Payment

This is the final vehicle rental transaction paid by the individual, company or firm leasing the vehicle within a finance agreement.

Finance Lease

This is a finance contract where the customer pays for use of the vehicle only and is responsible for the final payment; the funding company owns the vehicle at end of contract.

GAP Insurance

An insurance policy designed to cover a shortfall between the outstanding finance and the vehicle insurance settlement figure, in the event of a vehicle involved in an accident or being stolen.

GMFV

Guaranteed Minimum Future Value

HPI

A registered information related check on a vehicle. Hire Purchase Information.

Hire Purchase

This is a finance contract and includes conditional sale. The vehicle is hired by equal monthly payments and the customer ownership of the vehicle is at the end of the agreement.

Indemnities/guarantor

An indemnity is a form of guarantee, which could be requested by a finance company. It is where the consumer fails to pay an instalment; the person who gives the indemnity/guarantor will be requested by the Finance Company involved to make the payment instead. Regulated agreements are governed by “the Consumer Credit Act”.

Late charge

This is a penalty/fee charged from the Finance Company to a consumer for failing to pay payments within a grace period or on the due contractual date.

Lease

This is an agreement or contract, which is written out by the finance leasing company.

Lease Purchase

This is a finance agreement similar form to Hire Purchase, but where you can reduce monthly payments by having a “balloon payment” at the end of the agreement, which includes an option to purchase. Contract purchase also falls into this category.

Leasing

A term referring to the “Use only” of a vehicle, by a customer entering into an agreement with a finance company, it includes both payout and residual risk leasing such as Contract Hire or an Operating Lease for consumers.

List Price

Is the price of the vehicle, this can be used for taxation purposes if the vehicle is used for business use, but will not include discounts that were applicable.

Lessee

The vehicle hirer, customer or user of the vehicle who signed the lease agreement.

Lessor

Usually the Finance/Leasing Company or the legal owner of the vehicle who sets forth the lease terms.

Maintenance Contract

This is a contract that can be added to a vehicle contract for an extra cost, from the Finance/Leasing Company which can take care of servicing needs, repairs and day to day costs such as tyres, exhaust and battery replacement.

MRP

This is usually estimated at the beginning of an agreement and represents the value of the vehicle at the contract end. Manufactures Recommended Price Residual Value.

Miles per annum

This is how many miles you anticipate covering per year.

10’000, 12’000, 15’000, 20’000 etc.

Monthly Payment

This is the scheduled payment payable for the vehicle and any other extras selected such as maintenance etc.

Optional final repayment/purchase fee

A Finance/Leasing Company gives the customer an option to purchase the vehicle for a fee should you wish to keep the vehicle at the end of the contract. Or you have the option to: -

• Purchase the vehicle for the Guaranteed Future Value
• Return the vehicle and walk away
• Return the vehicle and order a new one

Payment Protection Insurance

An insurance policy designed to protect and enable you to still make your monthly repayments if you are unable to work as a result of sickness or an accident.

PCP

This is a term used for a finance agreement where at the end of the contract term, the customer has an option to purchase for the Manufactures Residual Value, or return the vehicle. Personal Contract Purchase.

PPM

This represents a type of excess charge on a contract being over the specified contractual mileage, this will be charged as a Pence Per Mile basis.

P11d Value

This refers to the vehicle price value when new, together with the additional cost of extras. The value is then used for taxation purposes by the Inland Revenue.

Primary Period

The initial term of the lease.

RFL

This refers to Road Fund Licence

Regulated Credit Agreement

An Agreement which, is regulated by the Consumer Credit Act. This means the Customer is not a limited company or the total amount of credit advanced is £25’000 or less this credit amount excludes any advance payment and interest charges.

Secondary Period

An extension period to a lease.

SMR

This refers to Service Maintenance and Repair.

Security Deposit

This is a lease deposit collected at lease signing which is used to cover lessee amounts owed, but not paid, at contract lease end, which is refundable.

Termination Fee

An early termination figure from a Finance/Leasing company for terminating a contract early.

Total amount payable

This is the sum of all the monthly payments and the Final Repayment.

Total monthly repayments

This is the sum which you will be paying each month including any options that has been selected as an extra.

Underwriting

This is a process, which a finance company goes through in order to decide whether to accept a proposal.

Unregulated Agreement

An agreement which is not regulated by the Consumer Credit Act.

WLC

This is the total cost of servicing, fuel and depreciation for the running of a vehicle for the period of the contract. Whole Life Cost.