Glossary

Glossary-header

Our glossary of terms is here to assist you with any unfamiliar terms that are commonly mentioned on the website.


Select a category:

Acceptance fee
A one-off payment to cover the administration of setting up the finance agreement & credit searches. Paid at the commencement of the finance agreement with the first payment or rental.

Accessories
An extra which can be added to the vehicle, which is not part of the manufacturer's specification.

Administration Fee
An administration fee may be charged on Contract Hire agreements for some changes to your agreement, this is explained in your agreement.

Agility
Agility is a type of finance agreement. Find out more about an Agility agreement

Agreement / document
A legally binding agreement made between a customer and a financial company for the purchase or use of a vehicle. The agreement is binding once it is signed on behalf of the finance company.

Annual Statement of Accounts
The Annual Statement is a document which shows account activity over the last 12 months on a finance agreement, including all the payments made to date, any paid late and any outstanding arrear.

APR
Also known as Annual Percentage Rate, it is the interest rate which a customer will pay on a finance agreement, including all fees.

Arrears
Also known as Annual Percentage Rate, it is the interest rate which a customer will pay on a finance agreement, including all fees.

Asset
The vehicle or item that is being financed.

AutoProtect
The administrators for Alloy Wheel Insurance by smart and GAP Insurance by smart for policies sold after March 2014.

Balance to be financed
Amount financed by the finance company on behalf of the customer to cover the cost of the vehicle.

Balance sheet
The balance sheet is a financial statement that summarizes at a specific point in time the following:
- company's assets
- liabilities
- shareholders' equity
These three balance sheet segments give investors an idea as to what the company owns and owes, as well as the amount invested by shareholders.

Balance Outstanding
This is the total amount payable together with any other payments failing due under the terms of the agreement (including but limited to default interest and charges) less any sums actually paid by the customer.

Balloon Payment
Please see lump sum payment.

Cash price:
On-the-road price that the vehicle is sold at.

CCA
The Consumer Credit Act 1974 is a Government act which protects the individual by regulating the formation, terms and enforcement of credit and hire agreements.

Cherished Plates Registration Number changes
A cherished number plates is a term that is traditionally used by the motor trade to describe a dateless registration marks issued before 1963. You may be more familiar with the terms "private registrations", "personalised vehicle number plates" or "private plates".

Commercial Vehicles
A commercial vehicle is any type of motor vehicle used for transporting goods or paid passengers.

Consented payer
If a third party is making payment on behalf of the customer, they must have the customers consent.

Contract Hire
Contract Hire is a type of leasing agreement. Find out about a Contract Hire agreement

Contract Hire (with maintenance)
Contract Hire (with maintenance) is a type of leasing agreement, which includes repair and maintenance options.

There are 3 different Repair and Maintenance options:
a) Service only
b) Full maintenance
c) Full maintenance with tyres

Standard Repair and Maintenance is automatically built into the quote which covers the cost and management of V5, MOT and Road Fund License.
Find out about a Contract Hire agreement

Credit amount
This is the amount of money you borrow, calculated by the cash price of the vehicle and deducting any deposit that is being put down.

Credit assessment
A credit check undertaken by our underwriters. A good credit assessment means you should be able to qualify, within the limits of your income, for most loans.

Data Protection Act (DPA) 1998
A credit check undertaken by our underwriters. A good credit assessment means you should be able to qualify, within the limits of your income, for most loans.

Data Subject Access Request (DSAR)
Under the DPA you are allowed to request a copy of all the information we hold on you. A fee may be payable depending on the information requested.

For further information visit the Information Commissioner's Office

Dealer
A person or firm in the business of buying and selling vehicles.

Default Charges
A charge that is applied to a customer in the event they miss a stated number of payments during their agreement.

Deposit
This is the amount of money which is paid at the start of a finance agreement. If a larger deposit is paid the monthly payments or rentals decrease.

Depreciation
A reduction or decline in the vehicles value over the term of the agreement. This is caused by condition, age and mileage.

Direct Debit
Banking term for regular payments that are taken from a banking account, upon customer authorisation.

DVLA
The Driver and Vehicle Licensing Agency, responsible for maintaining a national register of drivers and vehicles and collecting vehicle excise duty (road tax) in the UK.

Early Repayment
The customer has the right to repay early the amount they owe under any regulated agreement in whole or in part

Early settlement (termination)
The termination of a finance agreement by paying the outstanding balance before the agreement end date. Depending on the type of agreement the fee is calculated differently.

For regulated agreements this is calculated in accordance with the CCA requirements and the figure is valid for 28 days.

For unregulated agreements this is calculated by the Rule of 78ths and is valid up to 14 days.

European Consumer Credit Directive (ECCD)
This is a regulation introduced by the European Commission to harmonise the protection offered to customers across Europe. For more information click here

Excess mileage
Any miles that may exceed the initial mileage specified in a finance agreement.

Example: if you are contracted to use 36,000 miles over a three-year period and the vehicle is returned with 40,000 miles, the excess mileage is 4,000 miles.

Excess mileage charge
A charge based on miles driven over the amount contracted in the agreement when return of the vehicle. The amount is calculated by taking the excess mileage rate of the vehicle and multiplying it by the number of miles covered above contracted miles agreed.

Final rental / payment
This is the final payment due on the finance agreement.

Excess wear and tear
When the vehicle is damaged beyond normal expectations, when returning your vehicle at the end of an agreement, charges are applied.

Finance and Leasing Association (FLA):

The Finance & Leasing Association (FLA) is the leading trade body for the motor finance sectors in the UK, and is the largest organisation of its kind in Europe.

They have created an impartial guide to vehicle finance, whichhas been designed to help you understand your vehicle finance options before visiting your local showroom. To find out more about vehicle financing options visit:

www.financingyourcar.org.uk

Fine
A sum of money for a penalty by a court of law or other authority.

FCA:
The FCA or the Financial Conduct Authority, regulates financial firms providing services to consumers and maintains the integrity of the UK’s financial markets.

The FCA took over from the Financial Services Authority as of 1st April 2014.

www.fca.org.uk

GAP Insurance
(Guaranteed Asset Protection) GAP Insurance offers you the opportunity to not incur financial loss, if your vehicle is written off and is not replaced by the motor insurer.

Find out more about GAP Insurance

Handback Settlement
A customer can choose to do a handback settlement to end their agreement early by handing back the vehicle, however we require 95% of remaining rentals.

A handback settlement is unavailable for Hire Purchase or Finance Lease customers.

Hire Purchase
Hire Purchase is an ownership agreement. Find out about a Hire Purchase agreement

Hire Purchase Investigation (HPI) Check
A HPI check allows anyone to check if a vehicle has outstanding finance on it. If a vehicle is sold with finance outstanding that is not settled the finance company may repossess the vehicle. Please note that you may be charged a fee for this service.

For more information visit the Vehicle Safe Trading Advisory Group

Leasing
A term referring to the 'use only' of a vehicle, by a customer entering into an agreement with a finance company, it includes both pay-out and residual risk leasing such as Contract Hire or an Operating Lease for consumers.

Lessee
A person who holds the lease (aka a customer).

Lessor
The owner of an asset that is leased under an agreement to the lessee.

List Price
The price of the vehicle.
This can be used for taxation purposes if the vehicle is used for business use, but will not include discounts that were applicable.

Lump sum
Also referred to as a "Balloon Payment". A lump sum is agreed at the start of the agreement, this payment is deferred until the end of the finance agreement and is payable by the customer.

Maintenance Agreement (Service Maintenance and Repair)
This is a service agreement that can be added to a vehicle agreement for an extra cost, it can take care of servicing needs, repairs and day-to-day costs such as tyres, exhaust and battery replacement.

Mapfre Assistencia
The underwriters for GAP policies sold on or before 28th February 2014.

Mileage allowance
Allowance on the vehicle throughout the term of the agreement, including any initial mileage if a used vehicle.
Checked on a pro rata basis, subject to how long you have had the vehicle for.
Example for mileage on pro rata basis:
Mileage allowance= 20,000 miles p.a. (10,000 miles X 2 years).
Mileage over 20,000 will be charged to the customer as excess mileage

Mileage
The number of miles travelled or covered.

Miles per annum
The number of anticipated miles (covered in one year): 10,000, 12,000, 15,000, 20,000, etc.

Monthly payments
The scheduled payment that is set out at the commencement of the agreement.

MOT
Is a Ministry of Transport test to determine if a vehicle is roadworthy

MRP
Manufactures Recommended Price Residual Value. This is usually estimated at the beginning of an agreement and represents the value of the vehicle at the agreement end.

Net Proceeds
This is the total proceeds from the sale of the Vehicle (excluding VAT) less any reasonable costs and expenses of the sale, storage and transport of the vehicle.

Novation
The original customer ends any obligations under the original agreement and the new customer takes full responsibility for the agreement in their name.
The new customer has to have legitimate/familial link with the previous customer.

Conditions for a novation to be approved for individuals:
• Death
• Bankruptcy
• Armed forces posting overseas
• Prison
• Incapacity

Conditions for a novation to be approved for companies:
• Sale
• Merger
• Administration
• Liquidation

Novation fee
A one-off payment to cover the administration of setting up the new customer to the finance agreement.

On-the-road price
This price includes all taxes, delivery charges and the cost of the Road Fund Licence.

Operating Lease
Operating Lease is a type of leasing agreement. Find out about an Operating Lease agreement

Optional Purchase Payment
The Optional Purchase Payment or GFV is a payment that must be made if you are on an Agility agreement and which to own the vehicle at the end of the agreement.

This is calculated on the predicted residual value of a vehicle, which in turn is calculated according to information from trade guides and takes factors such as depreciation, mileage and condition into account.

Outstanding balance
Total outstanding figure of your agreements at any given time.

Partial Settlement
A partial settlement allows a customers to pay a large one off payment to reduce the amount of finance they have outstanding and to receive back the interest saved in the form of a rebate.

Portal
A portal is a secure site that allows customers to access and amend their agreement details 24 hours a day.

Login or register to MyInsurance

PPM
Pence Per Mile. This is a term for an excess charge on a vehicle that uses more than the specified agreement mileage.

Primary Period
The initial term of the agreement.

Regulated Credit Agreement
An Agreement which is regulated by the Consumer Credit Act. From 1st April 2008 most agreements will be regulated with the exception of Limited Companies, PLCs, and Partnerships (of four or more), whatever the amount financed.

Re-instatement fee
A fee of £200 which covers the administration involved in re-instating an agreement.

Repair and Maintenance
An agreement where the customer pays a monthly amount to cover repair and maintenance of the vehicle.

Re-polling
When a monthly payment is returned by the bank as unpaid, the finance company will call for the payment again.

Residual value
The amount the vehicle is worth at the end of the agreement.

Restructure
A change in the monthly payments to accommodate a customer's requirements.

RFL
Road Fund Licence, or used to be known as the Tax Disc.

Rule of 78ths
The Rule of 78 is a method of allocating the interest charge on a loan across its payment periods. Under the Rule of 78, periods are weighted by comparing their numerical values to the sum of all the digits of the periods, with the weights applied in reverse.

Settlement figure / quote
The termination of a finance agreement by paying the outstanding balance before the agreement end date. Depending on the type of agreement the fee is calculated differently.

For regulated agreements this is calculated in accordance with the CCA requirements and the figure is valid for 28 days.

For unregulated agreements this is calculated by the Rule of 78ths and is valid up to 14 days.

Statement of Account
The customer has the right to receive on request at any time and free of charge a statement in the form of a table showing the repayment owing under the agreement, the periods and conditions relating to the repayments and a breakdown of each repayment between capital, interest and charges.

Supplying Dealer
Approved smart Retailer responsible for delivery of the vehicle to the customer.

Transfer of legal title
Where all amounts outstanding have been paid and the customer retains the vehicle. Legal title will then pass from the finance house to the customer.

Termination Fee
The cost imposed by a financial / leasing company for terminating an agreement early.

Terms and conditions
General and special arrangements, provisions, requirements, rules, specifications, and standards that form an integral part of an agreement.

Third Party
A person or group besides the persons involved.

An appropriate Third Party can be:
Individuals: Spouse, Cohabiting Partner, Daughter/ Son, Mother/ Father, Grandmother/ Grandfather, Brother/ Sister
Limited Companies: Director of the company, Company Secretary
Sole Traders, Partnerships: As for individuals and if the company name is the same as the holders.

Total amount financed
Amount borrowed including accessories or extras.

Total amount payable (TAP)
General and special arrangements, provisions, requirements, rules, specifications, and standards that form an integral part of an agreement.

Total monthly repayments
The amount payable monthly, including any options that have been selected as extras.

Unconnected Third Party
An unconnected third party is someone who is not Director, Director’s spouse, or any family relation.

Underwriting
Assessment of credit-worthiness.

Unregulated Agreement
An agreement which is not regulated by the Consumer Credit Act.. Unregulated agreement: Limited company/PLC, partnership of 4 or more, local authority, charity.

VAT
Value Added Tax. This is a tax on consumer expenditure. Businesses (that are VAT registered and fully taxable) do not bear the final costs of VAT. They are able to charge VAT on the supplies that they make (output VAT) and recover VAT on purchases that they have made (input VAT).

V5c
This is the vehicle registration certifcate. The purpose of a V5c certificate is to register a nominated keeper to a vehicle, the registered keeper of a vehicle does not have to be the person who owns the vehicle, but just the person nominated for the responsibility of that vehicle.

Voluntary Termination
Voluntary Termination is an option giving customers the right to end any Regulated Contract, Hire Purchase or Agility agreements early through return of the vehicle.

Withdrawal
The customer has the right to withdraw from the agreement once the agreement is signed without giving any reason within the specified period.

This period will end after the 14th calendar day, counting from the day after the customer signs the agreement.However if they withdraw it is only from finance and not the vehicle and therefore have to repay the finance

Write-off
If a vehicles' value is less than the cost to repair it, an insurance company will declare the vehicle a 'write-off'. In some instances it may be more cost effective to replace your vehicle than to repair it.