Terminology

Payment profiles - 3 + 35 (spread payments), 3 + 21 (terminal pause payments)

This is the number of initial payments payable followed by the number of payments to be made. The payment profile has many variables from spread payment to terminal pause payments which allow a two (2) month lapse at the end of the agreement before the vehicle is either returned or acquired.

Application Fee / Documentation Fee
A fee, often levied by finance company for setting up the agreement or for providing options within the agreement.

Balloon Payment - The final payment of a finance agreement which is payable at the end of the agreement (usually optional).

Depreciation - The reduction in value of a vehicle caused by age, mileage and condition.

GAP Insurance
The Insurance covers many areas of loss but focuses on losses made against any losses incurred from settling the outstanding contract balance on termination if the vehicle is to written-off, this is subject to the agreed limits set within the GAP contract usually maximum of £5000.

RV - Residual Value. The value of the vehicle at the end of the agreement, normally estimated at the beginning of any agreement.

P11D Value
The retail value of the vehicle when new including any costs of extras, but excluding Road Fund Licence (RFL) and First Registration Fee (FRF) which is often set against tax as a benefit is Kind (BIK) when you have a company car.

PPM - Pence per mile, generally used when an additional charge is made for mileage over a contracted mileage.

RFL - Road Fund Licence (RFL)

With Maintenance
A optional element within a contract leasing vehicle agreement which covers (SMR) servicing, maintenance and repairs including tyre replacement, breakdown cover, roadside assistance.

WLC
Whole Life Cost - The total cost, including monthly or acquisition payments, depreciation, servicing and fuel incurred in the use of the vehicle during a defined period of time.

BIK & CO2 Charge
A charge of 15%+ will be applied to all MRP price, where the CO2 emissions do exceed 145g/km in 2005/2006 for all company car users. Some reductions are available for lower CO2 or alternative fuel vehicles. CO2 is the major greenhouse gas and the Government proposes to base this BIK tax on the value of grams of CO2 emitted per kilometer.

Benefit in Kind (BIK) Scale Charges
The current policy for 2005/2006 is 15% tax charge for emitting less than 145 grams of CO2 per kilometer, will increase by 1% for each five grams per kilometer up to a maximum of 35% for emissions in excess of 240g/km. Note that the given CO2 emissions figure of a car should be rounded down to the nearest 5 grams per kilometer. For example, if in 2005/2006 your car's emissions were 173g/km, your tax would be 21% rising to 22% in 2006/2007.