Leasing Glossary

Vehicle leasing uses a lot of specialist language. These plain-English definitions explain the terms you are most likely to see in a quote or agreement.

Agreement term

The minimum period you agree to keep and pay for the vehicle. Flexible subscriptions on this site have a 90-day minimum; fixed leases run for the full term shown in the quote.

Initial rental

An upfront payment made at the start of a lease. It is part of the rental cost, not a refundable deposit, and affects the monthly payment shown.

Monthly rental

The regular amount paid to use the vehicle. Check whether a displayed business price excludes VAT and whether maintenance is included.

Car subscription

A vehicle agreement that continues monthly after an initial minimum term. Road tax, routine maintenance, warranty, and breakdown assistance are normally included; insurance and fuel or electricity are not.

Fixed-term lease

An agreement for a set number of months. Returning the vehicle early can result in early termination charges.

Mileage allowance

The maximum mileage included in your agreement. It may be stated monthly or across the full contract term.

Excess mileage

Mileage above the agreed allowance, normally charged at a stated rate per mile when the vehicle is returned.

Fair wear and tear

The acceptable deterioration expected through normal use. Damage outside the applicable return standard may be charged separately.

PCH

Personal Contract Hire: a long-term personal lease where you make an initial rental followed by fixed monthly payments and return the car at the end.

PCP

Personal Contract Purchase: a finance agreement with monthly payments and an optional final payment if you want to own the vehicle. It is different from leasing.

Benefit-in-Kind (BIK)

Tax that may be payable when an employee has private use of a company car. The amount depends on the vehicle and the employee's circumstances.

Underwriting

The checks used by a provider to assess eligibility, affordability, identity, residency, and credit status before approving an agreement.

Road Fund Licence (VED)

Commonly called road tax. It is normally included for the duration of agreements advertised on this site.

Exact definitions and charges in your written quotation and agreement take priority. If a term is unclear, ask our team before signing.