We can all be guilty of using jargon from time to time. When it comes to leasing a car, there are some common terms that you might not be too familiar with.
This glossary will help you understand some of the language we use.
Like any asset, a car will typically lose value over time. The older a car is and the more mileage it has, the less valuable it becomes. This loss in value is known as depreciation. In a lease agreement, the lessee pays for the depreciation of the car during the hire.
The Documentation Fee is a fee we charge to cover the administrative costs associated with the lease. It is paid at the start of an agreement.
If you return a car earlier than expected, this is known as Early Termination. When that happens, you will likely incur early termination penalties. These fees are specified in our lease agreement.
If a car is returned to us in a condition that is beyond accepted fair wear and tear, End of Lease Charges will arise to return the car to an acceptable condition. The lessee is responsible for paying these charges.
When a lessee hires a car from us, we calculate a monthly rental based on the agreed term and mileage. If the mileage is higher than expected at the end of the agreement, the lessee is responsible for paying Excess Mileage charges at a rate determined in the lease agreement.
Based upon the term and mileage of an agreement, the lessor expects some deterioration in the condition of a car. This is known as Fair Wear and Tear. The lease agreement specifies what is considered acceptable wear and tear. As the lessee, you are responsible for remedial costs incurred to return a car to a satisfactory condition should its condition not be acceptable.
The Initial Instalment on a lease agreement includes the Documentation Fee plus the number of months initial payment the lessee chooses.
The Lease Term specifies the number of months the lease agreement will last. It defines the period that the lessee has a right to use the car.
The lessee is the person that has a car on hire. If you lease a car from us, you'll be the lessee, and we'll be the lessor. As the lessee, you're responsible for making regular payments for the hire of the car and for complying with the terms of our lease agreement.
The lessor is the company that owns the car and who hires it to the lessee. If you lease a car from us, we will be the lessor. We retain ownership of the car during the term of the lease agreement. It's our responsibility to comply with the terms of the lease agreement.
The Mileage Allowance is the maximum number of miles the lessee can drive a car during the lease term. If a lessee exceeds the mileage allowance stated in their agreement, the lessor will raise Excess Mileage charges.
The Monthly Rental is the amount the lessee pays to the lessor at regular monthly intervals in return for using a lease car.
The Residual Value is what the lessor thinks a car will be worth at the end of a lease agreement. It takes into account the age of the car and its expected mileage. Once we have a Residual Value, we know how much the car will depreciate, so we use this to calculate your monthly lease payments.