Lease & Contract Hire Glossary of Terms

3 + 11, 3 + 23, 3 + 35 or 3 + 47: This is the payment profile, this often consists of one initial payment equivalent to no more than 3 monthly rentals followed by the duration of the contract thereafter. The higher an initial payment the lower the monthly rental, Finance companies normally allow up to 12 payments in advance.

Arrangement Fee: This is a one off separate fee, often charged by finance companies, payable on signing of a Finance agreement.

APR: The Annual Percentage

Rate: This is the true rate of interest you are paying on a Finance agreement.

Balloon Payment: This is the final payment of a finance agreement (often a guaranteed value, please see GMFV).

Depreciation: The decline in a vehicles value often caused by age, condition, mileage and new model introduction.

GAP Insurance: In the event of a contracted vehicle being written off, G.A.P Insurance covers any shortfall in amount paid by insurers to the amount outstanding by a Finance Company.

GMFV / GFV: Guaranteed Minimum Future Value / Guaranteed Future Value

MRP: Manufacturers Recommended Price Residual Value is normally set at the start of a contract. This is the value of a vehicle when the contract expires, set using residual values.

P11D value: The P11D is the value of the vehicle when new including any Manufacturers or Dealer options. This value is used by both company car users when calculating their own company car taxation and the Inland Revenue for taxation purposes.

PPM: Pence per mile

Payment Profile: this dictates the number of payments required on a specified monthly basis (Spread rental = 3 Payment in advance followed by the contract term monthly thereafter / SMR = Service, Maintenance and repair.

Maintenance: This is optional, should a leasee choose Maintenance this includes all Servicing, Tyres and consumables (bar fuel). Please refer to your agreement for full details.

Terminal Pause: 3 Payment in advance followed by the contract term monthly thereafter with a 3 month holiday period prior to the contract end.

WLC: Whole Life Cost - The total cost accounting for depreciation, servicing, fuel and other related costs incurred when running a vehicle for a set period of time.A