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De-jargonning the Leasing Industry
We aim to make leasing as simple as possible for you and that includes making sure we talk to you in language that is easy to understand without all the industry terms and jargons. There are a few key phrases that we may need to use on your leasing journey simply because there isn't a better way to say it. To help you understand these terms we've put together this page that explains each of the pages
Accident management is simply the handling of a situation caused by a road traffic accident involving you or if you have a business, one of your drivers. This is not typically included in a lease agreement but we can discuss your options if this is something you are interested in.
This is the amount of miles you agree to travel in each year of your contract. You can obviously drive more than the contracted mileage but there will be a charge at the end of your lease for any excess mileage.
The most common annual milage allowances we see are 8,000 and 10,000 miles but we offer up to 50,000 depending on the model and contract terms. As part of our leasing process you will get to choose the best annual mileage for you.
This is a fixed amount charged by Xcite Car Leasing to cover the administration required to facilitate your lease agreement. Also referred to as an "Administration", "Arrangement" or "Processing" Fee.
An ATO, or Authority-To-Order, is a document that forms part of your order confirmation document pack. This will need to be signed by you and will give us the authority to order a car from the manufacturer or dealer on your behalf.
BIK (Benefit in Kind)
Benefits-In-Kind are taxable benefits that an employee or company director receive from their employer in addition to their salary—sometimes referred to as perks or fringe benefits. When it comes to cars these include a company car, car allowance or salary sacrifice arrangement.
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 one 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. Xcite Car Leasing 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; where a person or business designs, orders and hires a brand new factory fresh car, usually for two to four 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 (a higher initial payment reduces the monthly amounts).
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. It might also be known as the "cool period".
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 will be the date the finance documents are approved.
Please note that a new car cannot be delivered during the cooling-off period, but if the car is ready we can arrange delivery for as soon as it expires.
Degradation is used to describe the reduction in the charging ability and maximum capacity of the batteries, usually in relation to electric and hybrid cars but it can happen to the battery of a non-EV car too. In EVs it can be caused by extended use and poor charging habits. May also referred to as deterioration.
Delivery Lead Time
The delivery lead time is an approximate length of time between ordering your vehicle to when it is expected to be delivered. There are many factors that positively and negatively affect the delivery lead time.
Depreciation is the lowering of the value of a particular asset. Vehicles reduce in value dramatically over time and use, with a high proportion of their depreciation happening in the first few years after registration. The amount a car depreciates by is based on a number of factors including:
A car's ability to stay close to its original value by the end of the contract will have an impact on the cost of the lease which is why the residual value is taken into consideration when calculating the lease.
Excess Mileage Charge
An excess mileage charge is exactly what you would think it is. If you drive more than your contracted mileage allowance, then you will be charged 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.
You might also see this referred to as "overmiles".
A factory order is simply a car that is ordered from the manufacturer's factory. These will be the most customisable vehicles as the build has not started yet, but they will also have the longest lead time because of this.
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 you and the funder for the lease of a chosen vehicle. This agreement must be read carefully, agreed to and signed by you or if it is a business lease an authorised party.
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.
Delivery does not mean the vehicle will be trailered and some cars will be driven to the address. If you want the vehicle to be trailered to you then there may be an additional cost.
Guaranteed Asset Protection (GAP) Insurance is an insurance product which will cover the difference between the amount of compensation given when a car is deemed an insurance write-off and the remaining balance of a finance agreement.
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 you make as part of your lease agreement. It is not an initial deposit as it is non-refundable and forms part of the total cost of the lease. It may also be referred to as the "Initial Rental".
Initial Payments are usually shown as one, three, six or nine times the amount of the monthly rentals. It is your 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. Xcite Car Leasing is a leasing broker with decades of industry experience, expertise and inside knowledge of the leasing world.
Leasing Broker Federation
The Leasing Broker Federationis 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 and taxing the vehicle and any other associated cost.
Payment profile is the arrangement of the initial payment and following 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. It's similar to a Business Contract Hire, but the finance and credit checks are linked to the 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.
This is the term given to a driver's fear of an electric vehicle (EV) running out of power before the end of their journey. With advancements in EV technology there's plenty of reasons that range anxiety is no longer a valid concern - for more information take a look at our electric guides.
The 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 lease and is affected by mileage allowances and contract length. It is also sometimes enhanced by the inclusion of a maintenance plan.
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