3+23, 3 + 35, 3+47 (Payment Profile)
The number of initial payments payable by way of an initial rental followed by the number of rental payments to be made.
A fee, often levied by vehicle finance and car leasing brokers, payable on signing of a vehicle order form.
Approved Mileage Allowance Payment (AMAP)
See ‘Pence per mile’.
Annual Percentage Rate is the true rate of interest you are paying on a finance agreement.
The final payment of a Lease Purchase or PCP finance agreement.
Benefit In Kind (BIK)
If an employee uses a company owned car for their work commute and private use, then this is the rate of tax they pay, according to their income. Exactly how much is decided by the value of the car, CO2 emissions (the lower these two figures, the less it will cost) and whether it has a petrol or diesel engine. Electric and hybrid vehicles also have a lower BIK rate.
The reduction in value of a vehicle caused by age, mileage and condition.
Insurance covering losses arising as a result of the amount payable by insurers in the event of a write off being insufficient to clear the outstanding finance or lease payments.
Guaranteed Minimum Future Value (GMFV)
Also known as ‘Optional Final Payment’, GMFV is how much a car will be worth at the end of a PCP contract. It protects the customer against any potential fall in used vehicle values.
Hire Purchase (HP)
A purchase facility which spreads the cost of a vehicle, allowing the buyer to pay for a vehicle in regular, usually monthly, instalments while being able to use it. If the buyer fails to make a payment, the vehicle may be repossessed.
Manufacturers Recommended Retail Price.
The value of the vehicle, being the price when new together with the cost of extras. This value is used by the Inland Revenue for taxation purposes.
Personal Contract Purchase (PCP)
Similar to hire purchase and contract hire, a PCP deal allows a motorist to drive a new car by paying a certain amount every month over a fixed term, typically two to four years. Ownership of the vehicle remains with the funding company unless the customer chooses to acquire the vehicle at the end of the contract for a previously agreed total cost. If they decide against buying out the car, the customer can simply return the vehicle.
Pence per mile (PPM)
The rate a business pays an employee to use their own privately owned car for business purposes (i.e. driving to meet a client).
The value of the vehicle at the end of the agreement, normally estimated at the beginning of any agreement.
Road Fund Licence (RFL)
See ‘Vehicle Excise Duty’.
Service, Maintenance and Repair (SMR)
An over-riding term for mechanical and technical attention needed by a fleet car. Depending on the provider, an SMR package typically includes routine servicing, unexpected repairs, and replacement tyres amongst others.
The element within a finance or lease agreement which covers servicing, repairs and tyre replacement.
Whole Life Cost (WLC)
The total cost, including depreciation, servicing, fuel etc. incurred in running a vehicle for a defined period of time.
Vehicle Excise Duty (VED)
Frequently and mistakenly referred to as ‘road tax’ (much to the frustration of cyclists), VED is the rate you pay to the Government to drive your vehicle on UK roads. How much you pay is decided on how much CO2 your car produces.