Tim Alcock from LeaseVan.co.uk has defined the most important words and phrases you should expect to hear if you’re a builders’ merchant considering leasing a vehicle in 2018.
Vehicle leasing has fast become one of the most popular ways for business owners and tradespeople to drive a new car or van – but are you clued up on the most up-to-date lease lingo?
For many, lease jargon such as ‘personal contract hire’ and ‘hire purchase’ will go in one ear and out the other, and to some they’ll simply mean one and the same thing.
However, being able to define and recognise the difference between these terms will be what helps you weigh up your options and choose the best possible deal for your own situation.
Tim Alcock from LeaseVan.co.uk said: “Leasing is a great solution for many types of people, whether you’re a business owner who needs a new car for an employee or someone who simply wants to drive a new car without owning the vehicle and committing to large deposits.
“Some people get put off by leasing or think it’s just for business. This is partly to do with some of the jargon used, so hopefully this guide will go some way to help clear up any confusion and help you on your way to leasing your next car or van.”
A contract where one party grants the rental use of a vehicle for a specified period of months or years.
This is a legally-binding agreement which will normally entail the lessee making the payment on a specified date every month.
This refers to the length of the lease, which is typically two, three or four years. The length and the depreciation of the vehicle's value are two of the key factors determining the monthly rental.
The fall in value of a car or van over the life of the vehicle.
Depreciation is one of the most important factors in determining the monthly rental for a vehicle that is being leased.
It’s also the reason some people prefer leasing to buying as you do not suffer the depreciation and don’t have to worry about the cars future value you are simply paying a monthly rental.
This is the amount that you pay up front as a first rental to lease the vehicle, usually after delivery.
Early termination fee
A fee that the lessee must pay if they wish to terminate the lease early.
This fee will depend on a number of factors, such as the monthly rental and the length of term remaining. This can be anything from 50-100% of the remaining monthly rentals.
Excess mileage charge
A charge that will be levied if you exceed the agreed mileage, as set down in the terms of the lease.
This is sometimes a cause of anxiety, but it really shouldn’t be. Most reputable dealers’ lease quotations will include an excess mileage provision. If you ever exceed your total mileage allowance you will be charged at the rate quoted.
It is good practice to tailor your lease to accurately reflect the annual mileage that you typically cover. In most cases, we will be able to renegotiate your contract to reflect a change in your annual mileage during the life of the contract.
Your mileage cannot be changed in the first 12 months or the last six months of your lease.
Excess wear and tear charges
Charges imposed if the vehicle is returned in a condition not equal to the car’s age and mileage.
The leasing industry follows the BVRLA’s fair wear and tear guide to determine what is fair and what should be charged. The BVRLA will also act as an intermediary to resolve a dispute in the unlikely event one arises.
The person who leases the vehicle.
The party that is leasing out the vehicle, such as a finance company.
Personal contact hire
A long-term rental agreement where an individual rents a vehicle for a fixed period of time and with pre-agreed mileage stipulations. There is no option to own the vehicle, so you simply return the vehicle at the end of the lease term.