3 + 17, 3 + 23, 3 + 35
These figures relate to the initial number of monthly payments payable as an initial deposit for a car leasing contract, followed by the number of monthly payments to be made. 3 + 17 is a one-year contract. 3 + 23 is a two-year contract. 3 + 35 is a three-year contract.
Advance
The total amount of a loan.
Annual percentage rate or APR
The true rate of interest payable on a finance agreement.
Balloon payment
An amount deferred to the end of a car leasing agreement (normally equal to the predicted future value of the car based on mileage and condition). A balloon payment reduces monthly payments significantly. Contract purchase agreements allow you to take ownership of the car at the end of the agreement if you settle the balloon payment.
BIK - Benefit in kind
This is the sum of the car’s price (inc VAT), any optional extras (inc VAT) and the manufacturer’s delivery charge on the day before the car is registered. HM Revenue and Customs uses this figure to assess the amount of tax that is due on a company car.
Car allowance
Where companies offer an opt-out scheme, employees receive a monthly cash allowance on top of their salary in lieu of a company car. By taking cash allowance instead of a car, individuals can reduce their company car taxation and also benefit from car discounts usually only available to businesses.
CO2
CO2 is the abbreviation for carbon dioxide gas. Company car tax and road fund license are based on the amount of CO2 a car emits in g/km.
Deposit
The initial amount of money you pay at the start of a car leasing agreement. This is usually 3 monthly payments up front.
If you are opting out of a company car scheme and you can provide written confirmation from your employer that you will be receiving a cash allowance, then you can usually drive away a Mercedes or smart with 1 monthly payment up front.
Depreciation
The decreasing value of a car caused by age, mileage, wear and tear. Depreciation is measured as the difference between the original purchase price and the value of the car at the end of the agreement.
Equity
The value of a car less any outstanding finance amount.
Excess mileage
Mileage covered during a car leasing contract that is over the figure that was agreed in the contract. If a car has excess mileage at the end of the contract an extra charge will be made to cover further depreciation costs. This is usually a fixed price per mile.
FSA- Financial Services Authority
The regulatory body for the financial services industry and ensures all companies conform to agreed standards and practices.
GAP Insurance or Guaranteed Asset Protection
Insurance that protects the insured in the event of the car being written off or stolen, where there is a shortfall between the payment received under the terms of the fully comprehensive insurance policy that must be taken out on the car and the amount of finance outstanding on the car. GAP insurance covers this shortfall. Without it the insured may be liable.
GMFV or Guaranteed minimum future value
The minimum value of the car at the end of the car leasing contract. The GMFV is set and guaranteed at the outset of the agreement
HPI
Stands for 'Hire Purchase Information' and is a standard check that is used to verify a car's history and whether the car has any outstanding finance on it prior to sale or transfer. It also reveals if the vehicle has been imported, stolen or may have been written off in an accident.
Maintenance
An optional agreement that covers routine servicing, repairs, replacement parts, tyres, batteries and exhausts, what can be included in a car leasing contract.
MRP
Manufacturers recommended price before optional extras, discounts or VAT.
OTR - On the road
On the road price is the total cost of a new car and includes: The manufacturer's list price, optional extras, delivery chare, registration fee, road tax and VAT.
PPM
Pence per mile
RFL
Road fund licence
RV - Residual Value
An estimate of what the car will be worth at the end of the car leasing agreement.
SMR
Service, maintenance and repair
WLC
WLC stands for whole life cost. This is the total cost pf running a car for a set period of time. This includes depreciation, servicing, maintenance and repairs, road fund licence and fuel.
For further information on any aspect of Mercedes or smart car leasing call 0844 375 3263.
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For more information on car leasing see:
Business contract hire
Business contract purchase
Business finance leasing
Business lease purchase
Personal contract hire PCH
Personal contract purchase PCP