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Industry standard terms, explained
Sometimes even the simplest concepts, like leasing a car, can get complicated with industry terms and jargon. On this page you can you see some of the key terms we use in the leasing industry and more importantly what they mean.
The handling of a situation caused by a road traffic accident involving you or one of your drivers in a vehicle supplied by Wessex Fleet.
The total number of miles you are expecting to or have travelled in the vehicle in each year of your contract. Generally, higher mileages increase the cost of the lease. The most common annual mileage allowances are 8,000 & 10,000 miles per annum. But you can have a leasing contract with up to 50,000 miles a year.
A fixed amount charged by Wessex Fleet to cover the administration required to facilitate your lease agreement. Also referred to as an "Admin(istration)" or "Processing" Fee.
An ATO, or Authority-To-Order, is a document that forms part of your order confirmation document pack. This pack must be signed by the customer, confirming the exact vehicle to be ordered from the manufacturer. This is then sent to the supplying dealership, granting them authorisation to order your vehicle.
BIK (Benefit in Kind)
Benefits-In-Kind are taxable benefits that an employee or company director receive from their employing company in addition to their salary. Sometimes referred to as 'perks' or 'fringe benefits', these often include a company car allowance.
Business Contract Hire
Business Contract Hire is a form of long term rental which is applicable for customers who are: self-employed, sole trader, Limited Liability Partnership (LLP), Limited Company (Ltd), which have been in operation for 1 year or more.
VAT registered businesses can reclaim a portion of the VAT on a Business Contract Hire agreement - with prices advertised excluding the VAT.
The British Vehicle Rental and Leasing Association (or BVRLA) is a regulatory body for the rental and leasing marketplace. The BVRLA ensures that member organisations adhere to quality practices, providing customers with a high level of service. Wessex Fleet is a long-standing member, with our Director, Spencer Blake, having been the previous Chairperson of the BVRLA Leasing Committee.
Contract Hire is a form of leasing that operates like long-term rental; whereby a person or business designs, orders and hires a brand new factory fresh car, usually for 2-4 years, for a fixed cost determined by the contract length and driver's annual mileage. The fixed cost of the lease is divided between regular monthly payments and an amendable initial payment, with higher initial payment reducing the monthly amounts. The car is then returned to the leasing company at the end of the contract, ready for the next vehicle to arrive.
The Contract Length is the number of months that you wish to lease the vehicle for. The most common contract lengths are 24, 36 or 48 months (2, 3 or 4 years respectively).
Cooling Off Period
The term "Cooling-Off-Period" refers to a 14-day period where a customer may change their mind and cancel the financial contract, without facing a penalty. This is a function implemented by the Financial Conduct Authority for all forms of financial contracts. In leasing, this only applies to personal contracts and the start date of the cooling off period varies between Funders. NB An order cannot be placed for a vehcile until the cooling off period has elapsed, extending the delivery lead time by this amount.
The reduction in the charging ability and maximum capacity of the batteries of full or partially electric vehicles. this process is caused by extended use and poor charging habits. Also referred to as deterioration.
Delivery Lead Time
Delivery Lead Time is an approximate length of time between ordering your vehicle to when it is expected to be delivered. That are many factors that positively and negatively affect the delivery lead time.
Depreciation is the lowering of the value of a particular asset. Cars and other vehicles famously reduce in value dramatically over time and use, with a high proportion of their depreciation happening in the first few years after registration.
A car's ability to stay close to its original value by the end of the contract will have a huge impact on the cost of the lease.
Excess Mileage Charge
Excess Mileage Charge is exactly what you would think it is. If you drive more miles than what is stated in your contract, then you will incur a charge for every mile over your contracted allowance. Excess mileage is calculated at the end of your contract, so it is calculated as the total number of miles you have done, rather than looking at annual mileages individually.
Factory Order is the term used when a request needs to be made for your vehicle to be built at the manufacturer's factory. This often creates a longer delivery lead time than an in-stock vehicle.
The Financial Conduct Authority (FCA), previously known as the Financial Services Authority (FSA), is the government agency that is responsible for devising and implementing legislation and regulations for business operating within the Financial Sector. Due to the arrangement of financial contracts, this includes leasing brokers such as Wessex Fleet.
Also known as a "Finance Agreement", "Leasing Agreement" or "Contract". The Finance Documents represent the financial agreement between the customer and the Funder for the lease of a chosen vehicle. This agreement must be read carefully, agreed to and signed by the customer. This is then sent to the funder so that they can purchase your chosen car and grant you access and privileges associated with leasing the vehicle; all in exchange for regular monthly payments, as stated in the Finance Documents.
A Finance Lease is a form of leasing available to business customers. It works very differently to Contract Hire as there is an option to purchase the vehicle at the end of the contract. The full cost of the vehicle, including interest charges, may be spread over the duration of the contract or lower monthly payments be made followed by a substantial final lump sum "balloon payment". Finance Leases appeal to some businesses as there can be significant tax benefits when compared to other forms of vehicle acquisition.
'Fleet' is used to describe a collection of vehicles used by companies for business purposes. Fleet Management is a service that meets the requirements of a company's fleet, ensuring that the vehicles are fit for business use, roadworthy and adhering to UK legislation. This service will include vehicle financing & supply including short-term rental, Grey Fleet management, servicing & maintenance, driver's license checks and fuel card management.
Free Nationwide Delivery
Delivery of a vehicle to any destination in the UK mainland free of charge. This is something we offer as standard with every business and personal contract hire lease agreement.
Gap Insurance is an insurance product which covers the 'gap' between the amount of compensation given when a car is deemed an insurance write-off and the remaining balance of finance.
Hire Purchase is a financial agreement involving elements of leasing and a loan, with interest rates applied. Essentially, you pay the full cost of the vehicle plus interest, spread across regular monthly instalments. You will have use of the vehicle for the duration of the agreement and full ownership after the last payment has been made.
The Initial Payment is the first payment that a customer makes as part of a Contract Hire agreement. Not to be confused for, or referred to as, an initial deposit as this is non-refundable and forms part of the total cost of the lease. It is also referred to as the 'Initial Rental'. Initial Payments are usually expressed as 3, 6 or 9 times the amount of the monthly rentals. It is the customer's choice of how much the initial payment is, although a higher initial payment will result in lower monthly payments.
A Leasing Broker is a specialist organisation that can negotiate the best lease agreement for a customer, on their behalf. Wessex Fleet have decades of industry experience, expertise and inside knowledge of the leasing world. Using the high volumes of orders we facilitate, along with our reputation and unique relationships, Wessex Fleet can negotiate more beneficial discounts on a customer's dream car.
Leasing Broker Federation
The Leasing Broker Federation is an organisation that provides industry updates to its members and ranks each leasing broker. Wessex Fleet was proudly ranked 2nd in our category and 6th overall for 2018.
Manufacturer OTR (On-the-road price)
A vehicle's on-the-road (OTR) price is the cost of putting the vehicle on to the road in the UK. This includes the manufacturer's price of the vehicle and any optional extras (with any applicable discount that we negotiate for on your behalf, using our reputation and relationships), the cost of registering the vehicle and taxing it.
Payment Profile describes the arrangement of the initial payment and number of monthly payments required. For example, if a customer has chosen to pay 9 times the monthly rental as an initial payment on a 3-year lease, the payment profile will be expressed as '9+ 35'. This means an initial payment of 9 times the monthly payments, followed by 35 monthly payments, for 36 payments in total.
Personal Contract Hire
Personal Contract Hire (PCH) is a leasing agreement which operates similarly to a long-term rental agreement. Sharing its structure with Business Contract Hire, PCH differs in that the finance and credit checks are linked to an individual rather than a business. VAT is not able to be reclaimed on a PCH agreement, although the prices advertised are inclusive of this extra amount.
A nervous condition caused by the fear of an electric vehicle (EV) running out of power before the end of your journey, effectively stranding its passengers.
Residual Value is the estimated value of a vehicle at the end of the contract. The residual value is used to determine the cost of a customer's lease and is affected by mileage allowances and contract length. It is also sometimes enhanced by the inclusion of a maintenance plan.
Special Offers are the best deals in the market, allowing our customers to get the best car without hurting their budget. We're so confident in our special offers, that we setup the Car Lease Special Offers brand to prove it.
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