Nationwide Vehicle Contracts creates a glossary of car leasing terms to help UK drivers.
Ever been in a situation where someone is explaining something, and you have no clue what they're talking about? It happens all the time, and you can't go wrong with the trusty smile and nod.
However, for something as serious as car leasing, you need to be in the know with what you're being told. There's a lot of terminology that's important to understand.
In this blog, we've created a glossary of car leasing terms to help you understand the process a bit better.
A - Annual Mileage
This is the number of miles you can drive per year in your lease vehicle. The number is agreed upon when negotiating your lease deal.
B - Breakdown Cover
Breakdown cover provides you with assistance in the event of a breakdown. It's available 24 hours a day, seven days a week throughout the United Kingdom.
Our breakdown cover includes roadside assistance, home assist, accident cover, puncture cover, battery-range anxiety, and lack of fuel.
C - Cooling-Off Period
A cooling-off period is the period of time a customer can cancel the purchase of goods without incurring a penalty. For leasing, it starts from the moment you place your order or enter into a contract and lasts for 14 calendar days.
Change of Name Request
A change of name request is for when your personal circumstances change and you need to change the name on your lease contract. Change of name requests are usually needed because of marriage, divorce, or a transfer of contract.
For more information on change of name requests, check out our Change of Name Request guide.
D - Depreciation
Depreciation refers to the drop in value between a lease car at the start of your lease agreement and the end of it. It's estimated that a brand-new car will lose around 60% of its value over three years.
Depreciation value is crucial for those who are looking to buy a car at the end of their lease.
Delivery Lead Times
Delivery lead time is the amount of time it takes from placing the order on your lease car to it arriving from the manufacturer. Delivery lead times vary from manufacturer and differ from model to model.
E - Euro NCAP
Euro NCAP is a safety rating out of five given to brand-new cars. It was set up to help consumers, their families, and businesses identify the safest vehicle for their needs.
Extensions
When you're nearing the end of your lease contract, you can choose to extend the contract term beyond its original date.
This can either be an informal extension, where the customer continues to use the vehicle until collection is requested, or a formal extension, which is an agreement between the finance company and the customer.
Check out our Extending Your Car Lease Contract for more information.
F - Fair Wear and Tear
Fair wear and tear is the natural deterioration that occurs to every lease car throughout its contract term.
When you return your lease vehicle, it will be inspected for any damage that falls outside 'fair wear and tear'. Anything that's outside these guidelines will be subject to penalty charges.
Fast Leasing
Fast leasing is a service Nationwide Vehicle Contracts offer that includes lease cars available for rapid delivery, usually within three to six weeks.
This is perfect for those who need to get behind the wheel of a lease car as soon as possible.
G - Gap Insurance
If you've written off your lease car, there might be a 'gap' between what your insurer pays out and what you still owe on your lease car. A GAP Insurance policy covers the difference and protects you against financial loss.
H - Personal Contract Hire (PCH)
Personal contract hire is a long-term vehicle rental where you pay to rent the vehicle for the duration of your contract and then return it at the end of the agreement.
PCH is great for individuals who want to drive a new car every few years but don't want to own the vehicle.
I - Insurance Group
When arranging a car lease agreement, you'll need to consider what insurance group your car will be in. Groups range from 1 to 50, increasing in price.
L - Lease Term
The lease term is the duration of your contract. If you've taken out a lease for 24 months, this will be your lease term.
M - Maintenance
Maintenance is an added extra you can include in your car lease deal. For a fixed monthly fee, a maintenance contract includes all scheduling servicing, replacement tyres, MOTs, and other repair costs.
Check out our Vehicle Maintenance page for more information.
New Car
A new car is a car that's never had an owner or driver before and has come directly from the manufacturer. A new car is standard on all lease deals, unless stated otherwise.
O - Our Finance Partners
Our finance partners are provided through a bank of selected funding partners, with six main finance partners providing services to our customers.
Check out our Finance Partner page for more information.
P - Personal Contract Hire (PCH)
Personal Contract Hire is the go-to contract choice for most individuals looking to lease a car. You essentially rent the car for the duration of your lease term; then, when your contract is up, you simply return the car to the finance company. Simple!
Pre-Delivery Inspection
Before you can deliver your lease car, it has to go through a Pre-Delivery Inspection to ensure the car is in full working order and is safe to drive.
A Pre-Delivery Inspection is a complete and thorough examination of your lease car and is designed to highlight any issues with the car that may have been missed at the factory or sustained during transportation.
Q - Quote
A quote is the estimated cost a sales representative provides for a car lease deal. These are only initial estimates and are subject to change.
R - Residual Value
Residual value is basically the same as depreciation, so it refers to the car's value at the end of the lease term. The only difference is that residual value typically refers to the value at the end of the contract, while depreciation may be calculated on an annual basis.
S - Security Deposit
Although not essentially a security deposit, you'll have to pay an initial deposit on your lease vehicle when taking out a car lease deal. However much you pay is completely up to you and usually is either three, six, or nine months of your monthly rental.
Servicing
Servicing is something that every leaseholder must do to ensure your lease car is in good condition. It's an essential part of your lease agreement, and by keeping your car in good condition with regular servicing, you reduce the chance of being subject to fair wear and tear charges.
A full car service is recommended every 12 months or every 12,000 miles.
T - Termination
You can terminate your contract early if you can no longer fulfil your car lease agreement. If you decide to do this, you'll be subject to early termination charges, which are usually 50% of your remaining payments.
Early termination can be costly, so ensure you've explored every option before
Transfer
If your personal circumstances have changed, some finance providers may allow you to transfer the leased vehicle to another person.
A transfer of contract can be a complicated process and is often dealt with on a case-by-case basis with certain criteria that need to be met.
For more information, read our Transfer of Contract guide.
U - Used Leasing
Used car leasing is a service that Nationwide Vehicle Contracts offers, which allows you to lease second-hand vehicles.
Cheaper than new car leasing, Used Leasing is great for those looking to save a bit of money but also want to drive a relatively new lease car.
W - Warranty
Manufacturer warranty covers you for the costs of parts and labour to fix certain mechanical or electric faults for an agreed-upon period. The basis of a car warranty is the same, but every manufacturer includes finer details such as the length of the warranty and what it includes.
For more information, check out our Car Manufacturer Warranty guide.
Now you're up to date with car leasing terms, why not check out our car leasing deals. Nationwide Vehicle Contracts is one of the UK's largest car leasing brokers and offers a range of deals to suit your every need.
We also produce loads of car leasing advice, including our comprehensive Car Leasing Guides and our Blog on all things car leasing.
