Understand the most common phrases and jargon used within the leasing industry. If you are unsure what anything means, ask our team who will be happy to explain!
Lessee: The individual or entity that leases a car from a lessor. The lessee is responsible for making lease payments and complying with the terms of the lease agreement.
Lessor: The company or financial institution that owns the car and leases it to the lessee. The lessor retains ownership of the vehicle during the lease term.
Residual Value: The estimated value of the leased car at the end of the lease term. It is used to calculate the monthly lease payments and determines the purchase price if the lessee decides to buy the vehicle at lease-end.
Depreciation: The decrease in the value of a vehicle over time. In a lease, the lessee pays for the depreciation of the car during the lease term.
Vehicle Sourcing Fee: A fee charged by Britannia Car Leasing to cover administrative costs associated with initiating the lease. It is usually paid upfront.
Mileage Allowance: The maximum number of miles that the lessee is allowed to drive the vehicle during the lease term without incurring additional charges. Exceeding the mileage limit may result in excess mileage fees.
Wear and Tear: Normal usage-related damages and deterioration of the leased vehicle. The lease agreement specifies what is considered acceptable wear and tear, and the lessee may be responsible for excessive damages.
Lease Term: The duration of the lease agreement, typically stated in months. It defines the period for which the lessee has the right to use the vehicle.
Monthly Rental: The amount paid by the customer to the finance company at regular monthly intervals for the use of the leased vehicle.
Early Termination: The act of ending a lease before the agreed-upon lease term. Early termination may incur penalties or fees as specified in the lease agreement.
Gap Insurance: Optional insurance coverage that protects the lessee in the event of a total loss or theft of the leased vehicle. It covers the difference (gap) between the remaining lease balance and the insurance payout.
Excess Wear and Tear: Damages to the leased vehicle that go beyond the accepted wear and tear as defined in the lease agreement. The lessee may be responsible for paying for these damages at lease-end.