Car jargon can be a pain to get your head around at the best of times, never mind car leasing.
Thing is . . . it’s actually not that cryptic. And chances are you already know a few of the concepts already, even if you don’t know the fancy names for them.
So here’s some explanations to help you navigate from lease to lease and set you on your way. Consider it your A-Z, all-you-need-to-know list when it comes to car leasing.
Contract Hire/Personal Contract Hire (PCH): This one pops up a lot. It’s just a more formal way of saying ‘leasing’.
Lessee: The person (you) who’s leasing the vehicle. Or if it’s a business lease, it will be a company.
Lessor: The leasing company that gives you the vehicle.
Personal Leasing: A lease vehicle taken out by yourself for personal use.
Business Leasing: A lease vehicle (usually a van, but it could also be a car) taken out in the name of a business. Business leasing usually comes with certain benefit-in-kind tax benefits that you don’t get with personal leasing.
Monthly Payments: The amount that you pay each month for the lease vehicle. It’s fixed and doesn’t change.
Total Upfront (Deposit): Sometimes called the initial payment, this is the optional lump sum at the start which can make your monthly payments more manageable (though you still pay the same in the end). It’s not a ‘deposit’ in the usual sense though, as you don’t get it back.
Lease Term: The total duration of the lease agreement. This can be expressed in months or years.
Mileage Limit: The maximum number of miles (chosen by you) which you’re allowed to drive each year. This can however be changed at any point during your lease agreement.
Excess Mileage: The name for when you go over your agreed mileage limit, meaning you’ll have to pay extra fees. But this can actually sometimes work out cheaper per mile than agreeing on a higher mileage at the start of the agreement.
Quote: The cost of a lease deal, as provided by our leasing partners.
Early Termination: This is when you end your lease contract early. There are some hoops to jump through, but in general it’s very doable.
Stock Status: Whether it’s a factory order or an in-stock vehicle. Factory orders will take longer to be delivered to you, but it does mean you get to choose the car colour and add more of a personal touch.
Lead/Delivery Time: The amount of time it takes for the vehicle to arrive at your door. For in-stock cars, it’s typically 2-3 weeks, and for factory orders, 8-12 weeks.
Vehicle Warranty: This covers you for any costs in case something mechanical goes wrong with your car near the start of the lease (so it won’t cover, say, a crash or a new dent). All lease vehicles come with the warranty included.
Vehicle Depreciation: The amount of value a vehicle loses across time. But as you’re simply handing it back at the end of the contract, you don’t actually have to worry about this too much when leasing.
Insurance Group: The insurance group which your car falls into. These range from 1-50, and the higher the group, the higher the cost of your insurance. (Insurance isn’t included in the lease deal.)
Maintenance: This typically doesn't come with lease deals, but there’ll sometimes be the option to include it. Maintenance covers any servicing that the vehicle requires, including: repairs, tyres, batteries, new parts, and exhausts.
Trim Level: The version of a car in terms of appearance/performance or both. For example, the Vauxhall Grandland has a Design, GS and Ultimate trim. The higher trim levels are usually more expensive.
Credit Check: Most leasing companies require this before accepting you for a lease. It’s used to determine how well you handle money/debt.
Gap Insurance: Like standard insurance, gap insurance isn’t included in your lease. In the event that your vehicle’s declared a total loss, it covers the difference between the actual cash value of your lease vehicle and the amount you’ve got left to pay. Regular 3rd-party insurance would only cover the cash value.
Fair Wear and Tear: The natural deterioration of your lease vehicle over time. Fair wear and tear is deemed as acceptable ‘damage’ and isn’t attributed to you. Excess wear and tear is damage that goes beyond this, and which will incur fees.
You'll find most of these terms across the whole leasing market, but a few might only be used by certain funders on certain deals. And remember, always read through your lease contract.