Car Leasing Glossary — 100 Essential UK Leasing Terms
Leasing a car should feel simple — but if you’re new to it, the terminology can sometimes feel like a different language. This glossary explains every major UK leasing term in clear, plain English.
A
Agreement
The contract outlining the vehicle, term, mileage, and responsibilities between the hirer and funder.
Annual Mileage
The miles per year included in the lease. Going over this triggers excess mileage charges. See: How to Choose the Right Lease Mileage.
Approval in Principle (AIP)
Indicative approval subject to full underwriting.
APR
Relevant to loans/PCP/HP finance. Not used for contract hire pricing.
Add-On Maintenance
Optional package covering servicing, tyres and breakdown under the monthly rental.
Accessory Pack
Dealer/OEM accessories added to the vehicle. May affect P11D value and pricing.
Administration Fee
A fee charged for the processing of the lease order/arrangement.
Allocation / Build Slot
A manufacturer production slot associated with a factory order vehicle.
Alloy Wheel Damage
Scuffs beyond fair wear & tear may be charged at return.
Alternative Fuel Vehicle (AFV)
EVs, hybrids, or hydrogen vehicles — may have tax/emission benefits.
B
BCH — Business Contract Hire
Leasing for businesses with potential VAT/tax benefits. See: Business Leasing Guide.
BIK — Benefit-in-Kind
Company car tax calculated from P11D value and CO₂. Related: Company Car Tax 2025.
Broker
An FCA-authorised intermediary (like Silverstone Leasing) that sources offers from multiple funders.
BVRLA
Industry body setting Fair Wear & Tear standards and conduct expectations.
Bad Credit
Not an automatic decline. Affordability, recent conduct and stability are key factors. See: Bad Credit Leasing Guide.
Benefit Statement
Employer document outlining deductions/benefits under salary sacrifice schemes.
Business Use
Work-related journeys excluding commuting (for tax/insurance rules).
Base Rate
Interest benchmark influencing ownership product pricing.
Battery Degradation
A reduction in EV battery range over time — usually warranty protected.
C
Cancellation Rights
Consumer protections when cancelling orders within regulated cooling-off periods. See: Your Rights.
Cooling-Off Period
Time after signing where cancellation may be allowed.
Credit Check
Assessment of credit conduct & affordability before approval.
Company Car Tax
Tax based on private use of a work-provided vehicle. EVs offer big savings. See: Guide 2025.
Congestion Charge
Fee for driving in certain city zones. EVs may be exempt.
Collection & Delivery
Logs handover and return logistics. Confirm documentation required.
Commission Disclosure
FCA requirement to show how brokers are paid. See: Silverstone Disclosure.
Continuous Payment Authority (CPA)
Direct Debit authorisation permitting automatic rental payments.
Courtesy Car
Short-term replacement during repairs (depending on policy).
D
Depreciation
Reduction in a vehicle’s value over time. Leasing protects you from depreciation risk, as you return the car at the end.
Delivery
Vehicles are delivered nationwide. Confirm whether delivery is included or chargeable.
Documentation Fee
A fee charged for processing finance documentation; varies by funder.
Dual Control Vehicles
Cars with an extra pedal set for instructors — available via specialist lease providers.
Damage Recharge
Costs billed if returned condition goes beyond Fair Wear & Tear standards.
E
EV — Electric Vehicle
Battery-powered vehicles with zero emissions. See: Electric Car Leasing Explained.
Excess Mileage
Fee charged per mile over agreed annual mileage. Rates vary by vehicle and contract.
Early Termination
Ending a lease early usually incurs charges, often based on remaining rentals.
Enhanced Maintenance Package
An upgraded version of a maintenance plan including additional wear-item cover.
Eligibility
Finance approval based on credit assessment, affordability and identity checks.
Evidence of Identity
Documents like driving licence or utility bill confirming identity & address for compliance.
F
Factory Order
A custom-built vehicle requiring wait time. Compare: In-Stock Deals.
Fair Wear & Tear
Industry standard for returned vehicle condition as defined by the BVRLA.
Finance Underwriting
Risk assessment by the finance provider before approval.
Fuel Type
Petrol, diesel, hybrid or electric — impacts running costs, emissions and tax.
Full Maintenance
Covers servicing, tyres and breakdown for fixed cost predictability.
G
GAP Insurance
Protects against a shortfall if the car is written off and insurance won’t cover outstanding rentals.
Gross Payment
Full rental amount before any applicable VAT relief.
Government Grants
Occasional support for electric vehicles or infrastructure that may influence pricing.
Good Credit History
Strong financial track record improving approval chances and pricing.
H
HP — Hire Purchase
Finance product where you can own the vehicle at the end. Not a lease.
Handover
Vehicle delivery/collection with documentation and condition confirmation.
Hybrid
Vehicle powered by both a combustion engine and electric motor. See: Hybrid Leasing Offers.
Holiday Payment Option
Deferred or paused rentals sometimes allowed by funders (case by case).
I
In-Stock
Vehicles ready for quick delivery, avoiding factory order wait times. See: In-Stock Offers
Insurance Group
Banding that influences insurance premiums — based on vehicle performance, safety and repair costs.
IDD — Initial Disclosure Document
Required document outlining regulatory status and services. See: IDD
Initial Rental
Advance payment (e.g., 1, 3, 6 or 9 rentals). Affects monthly cost but not total cost significantly. Learn more: Initial Rental Guide
Inspection
Condition check carried out on delivery and return.
J
Jaecoo
New automotive brand offering modern SUVs. See: Jaecoo Lease Deals
Jaguar (Brand)
Manufacturer with performance-focused saloons and SUVs. See: Jaguar Leasing
K
kWh — Kilowatt-hour
Battery energy capacity. More kWh = longer EV range. See: kWh Explained
Kerb Weight
Vehicle weight with fluids and essential equipment — affects performance and efficiency.
L
Lease Extension
Agreement to extend after end of term — subject to funder approval.
Lease Duration
The length of the contract — typically 24, 36 or 48 months.
P11D Value
Vehicle list price including VAT and options — used to calculate BIK tax.
Loyalty
Repeat customers may receive special rates or exclusive offers. See: LoyaltyPlus
M
Mileage Allowance
Total agreed mileage per year. Key factor in pricing.
Maintenance Package
Optional: covers servicing, tyres, and roadside assistance.
Motability Scheme
Scheme helping disabled people lease vehicles using qualifying benefits.
MPG — Miles Per Gallon
Fuel efficiency metric — higher MPG = lower running costs.
N
Nil Advance
Where no advance payment is required — not common but can be available.
NHS Leasing Scheme
Salary sacrifice scheme tailored for NHS workers. See: NHS Leasing
O
OTR — On The Road Price
List price including delivery, number plates, fuel and first registration fee.
P
PCP — Personal Contract Purchase
Finance product with an optional final balloon — differs from leasing.
PCH — Personal Contract Hire
Most common lease type for private drivers — fixed monthly rentals, hand back at end.
P11D Form
Tax form employers must file for company cars and benefits. Linked to BIK taxation.
Plug-In Hybrid (PHEV)
Hybrid with larger battery and charge port — short EV-only range possible.
Pre-Approval
Indicative checks before a full application — speeds up decision time.
Q
Quote
Document outlining pricing, term, mileage and options. Be sure to confirm availability quickly — offers can change daily.
R
Residual Value (RV)
The estimated value of a vehicle at the end of a lease — determines monthly rental cost.
Road Tax (VED)
Tax based on emissions — usually included in contract hire for the full term.
Renewal
The process of arranging a new lease before the current one ends — often with loyalty savings.
S
Salary Sacrifice
Employees exchange part of salary for a lease — significant EV tax benefits. See: Salary Sacrifice Guide
Service Rental
Monthly cost specifically for maintenance in a maintained contract.
Soft Credit Search
Initial check that doesn’t affect your credit score.
Stock Availability
How quickly vehicles can be delivered — dependent on model and demand.
SMR — Service, Maintenance & Repair
All upkeep items required to keep the vehicle roadworthy.
T
TCO — Total Cost of Ownership
Overall cost including rental, fuel/charging, insurance and maintenance.
Tyre Policy
Defines tyre replacement rules under maintenance packages.
Telematics
Systems that track location/driving data — common in fleet management.
Turn-in Fee
Optional charge by some funders when handing back the car.
U
Uptime
Percentage of time a fleet vehicle is operational — key business KPI.
UKCA Marking
Compliance label replacing CE mark in Great Britain.
V
VAT
20% tax on rentals. Up to 50% reclaimable for business use, 100% reclaimable on maintenance (subject to rules).
Vehicle Recovery
A breakdown service — included with most maintained leases.
V5C Logbook
Registration document retained by the funder — driver is not the registered keeper.
W
Wear Items
Parts like tyres and brakes that deteriorate over time — included under maintenance packages.
WLTP
Standard for real-world fuel and emissions testing.
X
Xenon Headlights
High-intensity lighting, often a paid upgrade.
Y
Yearly Contract
Rare in leasing — typically minimum terms are 24 months+
Z
Zero Emission
Vehicles producing no exhaust emissions — includes all-electric models.
Ready to lease your next car?
Compare the UK’s most competitive leasing deals with expert guidance from our friendly team.
View Special Offers Request a Callback