Reference
Car leasing glossary
Every term you'll meet in a leasing quotation or contract, explained without jargon. Bookmark it — it's more useful than it sounds.
Definitions
Leasing terms A–Z
If a word in your quotation doesn't appear here, ask us and we'll add it.
Agreement term
How many months your contract runs. Short-term agreements typically span 1 to 24 months, compared with 24 to 48 months for conventional leasing.
Balloon payment
A large final payment built into finance products such as PCP to keep the monthly cost artificially low. There is no balloon payment on a subscription or short-term lease — you simply return the car.
Benefit in kind (BIK)
Tax paid by an employee on a company car available for private use, calculated from the car's P11D value and its CO₂ emissions. Electric cars sit in a far lower band than petrol or diesel.
Broker
A firm that arranges vehicle finance between you and a funder or supplying fleet. We are both broker and supplier — a large share of what we quote comes straight from our own fleet.
Business contract hire (BCH)
A lease taken out in a company's name, quoted excluding VAT. VAT-registered businesses can typically reclaim 50% of the VAT on a car with any private use, and 100% on a commercial vehicle used solely for work.
Car subscription
An all-in monthly agreement bundling the vehicle, servicing, road tax, warranty and breakdown cover, usually with a short minimum term followed by a rolling notice period. You still need to arrange insurance and pay for fuel or electricity.
Contract hire
The formal term for leasing: you pay to use a vehicle for a set term and mileage, then hand it back. Ownership never transfers to you.
Delivery and collection
Bringing the vehicle to you, and taking it away again at the end. We can deliver into central London and the boroughs; charges depend on postcode and are confirmed in writing before you commit.
Excess mileage charge
A pence-per-mile rate applied if you go over your contracted mileage. It is quoted up front, so the cost of running over is never a surprise.
Fair wear and tear
The BVRLA's published standard for acceptable condition on return. Our short-term vehicles are checked against our own return standards instead — BVRLA fair wear and tear only comes into play if a vehicle is kept beyond 18 months.
Flexible lease
A lease with a short minimum term, often three months, that then rolls monthly with a notice period, so you can extend or exit without a penalty.
Funder
The finance company that owns a leased vehicle. On many of our short-term agreements, the vehicle is owned by our own fleet instead of an external funder.
Initial payment / initial rental
The larger first payment at the start of an agreement, quoted as a multiple of the monthly rental — rental paid in advance, not a deposit, and not refundable. A separate refundable deposit may also apply, subject to status.
Lead time
The wait before delivery. In-stock short-term vehicles are often available inside two weeks, against months for a factory order.
Long-term car hire
Daily rental stretched over months instead of days — quick to arrange, but usually the most expensive per month once you get past a few weeks.
Maintenance package
Cover for servicing, tyres and mechanical repairs, included by default on subscriptions and flexible leases. On a fixed short-term lease it is not standard but is optional on most agreements. Tyre cover is for reasonable wear only — accidental damage and excessive wear are chargeable.
Mileage allowance
The mileage built into your contract, usually quoted per month on short agreements (for example 1,500 miles per month) and annually on longer ones.
Non-status leasing
An agreement for an applicant 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 carried out; the difference is a specialist underwriter reviews the case individually instead of a system declining it automatically.
P11D value
A car's list price including VAT and delivery, but excluding road tax and the first registration fee. It is the figure used to calculate benefit-in-kind tax.
Personal contract hire (PCH)
A lease taken out in an individual's name, quoted including VAT, with nothing to reclaim.
Personal contract purchase (PCP)
A finance product with an optional final payment that can end in ownership. Unlike leasing, PCP ties you into the vehicle for the life of the agreement.
Rolling contract
An agreement that continues month to month after its minimum term, until either side gives notice. Ours needs just 5 working days' notice, subject to availability and blackout periods.
Road fund licence (RFL)
Vehicle Excise Duty — road tax. Included for the full term of every subscription and short-term lease we supply.
Salary sacrifice
An arrangement where an employee gives up part of their gross salary for a car, saving income tax and National Insurance. Works best with electric vehicles because of their low benefit-in-kind rate.
Short-term lease
A fixed-term contract hire agreement, typically 3 to 24 months, sitting between daily rental and conventional leasing.
Subject to status
Meaning the agreement depends on a credit assessment. Almost all vehicle finance is subject to status; our specialist services exist for situations a standard assessment struggles with.
Next step
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