Car leasing jargon explained

Nick Francis

21 May 2020

1/3
Leasing can be an affordable way to get the car of your dreams, but the process is loaded with confusing jargon.

Leasing is a popular method for drivers to get behind the wheel of their dream car: the monthly payments are often more affordable than other forms of finance and it removes a lot of the stress of owning a car.


That’s why around 1.8 million people in Britain opt to lease a car, but it doesn’t mean the process is simple. You can check out our guide to the various ways to purchase a car here, but if you’re thinking about leasing, you’ll find the following jargon buster extremely useful.


Find a great leasing deal with YesAuto


Admin fee


This is pretty much standard for any lease deal, there will be an administration fee to pay, ostensibly to cover the effort of creating paperwork and getting the deal signed off. Make sure you ask up front what the admin fee will be, as they vary from company to company.


Broker


A broker’s job is to get you the best lease deal possible, as well as provide advice and guidance on the way. They do not work for the dealership or the leasing company, but they will get a cut of the deal. A good broker can be extremely helpful.




Bedroom broker


The term used to describe an individual, rather than a company, who offers leasing deals. These people are often operating outside of the law so best avoided.


BVRLA


It stands for the British Vehicle Renting and Leasing Association, and they oversee the leasing industry, upholding standards set out in financial law. They are on your side.


Contract


This the leasing contract you will need to sign before getting your car, and in it will be the length and monthly payment amount, as well as any other fees. You must check and check again to be sure you understand and are happy with the terms.


Credit score


Everyone has a credit score and the higher it is the more chance you stand of getting a leasing deal and a favourable rate of interest. Before being offered a leasing deal a broker will run a credit check to make sure you’re eligible.


Build your dream car with YesAuto


Deposit


You’ll almost certainly have the chance to pay a deposit for the leasing deal, which will vary depending on your budget. The more you pay, the lower the monthly payments are likely to be. A lot of leasing deals can be made with little or no deposit, but the monthly payments will be higher.


Depreciation


Leasing companies will take into account the depreciation of the value of the car while you are in your contract terms, and it will affect how much you pay each month.


Excess mileage


Your leasing deal will have a mileage cap built it: a limit on the number of miles you can drive during the lease period. If you go over the limit, you will be charged per extra mile, so make sure you are realistic about how many miles you drive before committing.


Fair wear and tear


This is the term to describe the amount of acceptable wear and tear on the car caused during the lease deal, so you won’t be charged for it when you hand the car back. Any damage or wear beyond the stipulated amount will make you liable to a charge.




Financial Conduct Authority (FCA)


The FCA regulates the UK financial market and is there to protect you from rogue leasing companies or bad practices.


Initial payment


Not to be confused with the deposit, this is when the first payment towards your lease deal will be taken, so make sure you have the finds in your account.


Lead time


This is the length of time with will take for your car to arrive. It normally only applies to new cars, which have to be built and fitted to your specifications, but it can take months, depending on the popularity of the car.


Part exchange


Many leasing companies will take your old car as part exchange to contribute towards your deposit on the leasing deal.


Residual Value


This is the calculated value of the car once the finance deal has come to an end, and it can affect your monthly payments. The more the dealership can sell the car for once it’s returned, the less they need to charge you.


Road tax


Road tax - of the Vehicle Excise Duty – should be included in your leasing deal, which means it’s one less thing to worry about. It will be included in your monthly payments. The amount of road tax you pay depends on how much CO2 the car you are leasing produces.


Total repayable


Your paperwork should very clearly state how much in total you will pay over the course of the leasing deal.


VAT


As with most purchases, unless bought against a business, you will need to pay 20% VAT on the finance deal.


Read more


Should I lease an electric car?

How to spot a fake car leasing deal

Is leasing better than PCP?

360° View

Full Specs

Used Car

Videos

News

Search any model to find out everything you need to know. Get full specs, news, reviews, videos and much more!

Nick Francis

21 May 2020