Reference
Leasing jargon, translated
Every term that turns up in a quotation or contract, put into plain English. Genuinely more useful saved than skimmed once.
Definitions
Leasing terms A–Z
If a word in your quotation doesn't appear here, ask us and we'll add it.
Agreement term
The number of months you're committing to. Ours generally sit in the 1 to 24 month bracket — a conventional lease runs 24 to 48 months, roughly double.
Balloon payment
A deliberately oversized final instalment that finance products like PCP use to make the monthly figure look smaller than it really is. Leasing and subscriptions don't work this way — hand the keys back at the end and you're done.
Benefit in kind (BIK)
The tax bill an employee picks up for private use of a company car, worked out from the car's P11D value multiplied against a CO₂-based percentage. Electric models get taxed in a noticeably kinder band than petrol or diesel.
Broker
An intermediary that connects you to a funder or fleet for vehicle finance, without necessarily owning any stock itself. We sit on both sides — broker for some deals, direct supplier for a good chunk of what we quote.
Business contract hire (BCH)
Leasing signed in a limited company's name, priced without VAT shown. A VAT-registered business can generally claw back half the VAT on the rental where there's private use, and all of it on a van used purely for work.
Car subscription
One monthly figure covering the car, its servicing, road tax, warranty and breakdown cover, running on a short minimum term before rolling with notice thereafter. Fuel and insurance are still yours to sort.
Contract hire
Leasing in its formal sense — a fee to use a specific vehicle for an agreed period and mileage, returned afterwards. You never hold title to it at any point.
Delivery and collection
The vehicle arriving at your door, then being taken away again once the agreement's finished. Every London borough is within reach; the charge itself depends on your postcode and gets confirmed to you in writing beforehand.
Excess mileage charge
A per-mile rate that kicks in once you go past your agreed allowance. It's stated on your quotation from day one, so there's no surprise bill if you run over.
Fair wear and tear
The BVRLA's industry benchmark for what condition a returned vehicle should be in. We use our own, separate return standards instead for anything under 18 months — BVRLA's version only takes over once you've held a vehicle past that point.
Flexible lease
A lease structured around a short commitment — three months is typical — that then continues on notice, giving you an exit that a standard fixed lease doesn't offer.
Funder
Whichever finance house technically owns a leased car. On a good number of our own agreements, that's simply us — no external funder in the chain at all.
Initial payment / initial rental
The bigger first payment due when an agreement starts, calculated as a multiple of your monthly figure. It's rental paid ahead of time, not a deposit, and it doesn't come back. A genuinely refundable deposit is a separate, additional thing, only required in some cases.
Lead time
How long you'll wait for the vehicle to turn up. Stock we're already holding can often be with you inside a fortnight; a factory order is a different conversation entirely, usually months.
Long-term car hire
Rental-car pricing stretched across months rather than days. Fast to set up, but past the first month or two it tends to cost noticeably more than a lease or subscription would for the same car.
Maintenance package
Servicing, tyres and mechanical fixes bundled into the price automatically on subscriptions and flexible leases. On a fixed lease it's not automatic, though most agreements let you add it. Tyres are covered for normal wear only — kerbing or accidental damage isn't included.
Mileage allowance
The distance built into your contract. Shorter agreements tend to quote it monthly (say, 1,500 miles), while longer ones quote an annual figure instead.
Non-status leasing
Cover for applicants who fall outside a funder's usual credit box — a fresh company, directors based abroad, an overseas parent, or simply no UK credit footprint yet. A credit check still happens; the difference is a human underwriter looks at the case rather than an automated system rejecting it outright.
P11D value
A vehicle's price as used for tax purposes — list price plus VAT and delivery, minus road tax and the first registration fee. This is the number that feeds into a benefit-in-kind calculation.
Personal contract hire (PCH)
The individual (rather than company) version of leasing, quoted with VAT already folded into the price, with no reclaim available.
Personal contract purchase (PCP)
A finance agreement with a large optional payment at the end that lets you buy the car outright if you choose. It's a genuinely different product from leasing — you're locked to that one vehicle for the deal's duration.
Rolling contract
A deal that keeps going, month after month, once its minimum term has passed, until you or we give notice to end it. Ours needs 5 working days, subject to availability and blackout periods.
Road fund licence (RFL)
The formal name for road tax. It's paid for the entire length of every agreement we write, subscription or lease.
Salary sacrifice
A scheme where part of an employee's pre-tax salary funds a car, cutting their income tax and National Insurance bill. Electric vehicles make the numbers work best, thanks to their low BIK rate.
Short-term lease
A fixed-length contract hire deal, usually somewhere between 3 and 24 months — shorter than a conventional lease, longer and cheaper than daily rental.
Subject to status
Standard wording meaning a credit check decides whether the agreement goes ahead. It applies to nearly all vehicle finance; the specialist routes we offer exist specifically for the cases a routine check doesn't handle well.
Next step
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