Amount financed
The total sum being borrowed. Equal to the price of the car minus any deposit or part-exchange value. Interest is calculated on this figure.
Annual mileage cap
A maximum number of miles you can drive each year on a PCP or PCH agreement without penalty. Exceeding it triggers an excess-mileage charge, usually 5–25p per mile.
APR (Annual Percentage Rate)
The standardised total cost of borrowing, expressed as a yearly percentage that includes both interest and any mandatory fees. The single most useful number for comparing deals.
Balloon payment
A large, optional final payment at the end of a PCP agreement, calculated at the start based on the car's guaranteed minimum future value (GMFV). Pay it and you own the car; hand the car back and you don't.
BVRLA fair wear and tear
The British Vehicle Rental and Leasing Association's industry-standard guide to what counts as acceptable end-of-lease damage. Anything worse is chargeable.
CCJ (County Court Judgment)
A formal English or Welsh court order to repay a debt. It stays on your credit file for six years from the date issued, whether paid off or not.
Credit reference agency
One of the UK's three consumer credit bureaus — Experian, Equifax and TransUnion — that hold your credit file and score you for lenders.
Deposit
Cash or part-exchange value you contribute up front. Reduces the amount financed, which lowers your monthly payment and total interest.
Early settlement figure
The exact amount you'd need to pay today to fully close out an existing finance agreement, including any interest already accrued.
FCA (Financial Conduct Authority)
The UK regulator that authorises and supervises consumer credit brokers and lenders. Every legitimate car-finance company on your quote page will be FCA-authorised.
FLA (Finance and Leasing Association)
The industry body for UK motor and consumer finance. Publishes monthly lending statistics that indicate market health.
GAP insurance
“Guaranteed Asset Protection”. Insurance that pays the difference between your car's market value and your outstanding finance balance if the car is written off.
GMFV (Guaranteed Minimum Future Value)
The lender's guaranteed minimum value of the car at the end of a PCP term. Sets the balloon payment. If the car is worth more, you keep the equity.
Hard search
A formal credit-file enquiry that leaves a visible footprint. Only occurs once you accept a finance offer, and stays on your file for 12 months.
Hire Purchase (HP)
A secured car-finance agreement paid in fixed monthly instalments. You own the car outright once the final payment and option-to-purchase fee are paid.
IVA (Individual Voluntary Arrangement)
A legally binding UK insolvency arrangement to repay creditors over 5–6 years. Requires your Insolvency Practitioner's consent for new credit above £500.
Loan-to-value (LTV)
The percentage of the car's value being financed. 100% LTV means a no-deposit deal; 90% LTV means a 10% deposit.
Negative equity
The gap between what you owe on a finance agreement and what the car is currently worth. Only relevant if you plan to change car early.
Option to purchase fee
A small fixed fee (typically £50–£200) at the end of an HP agreement that transfers legal ownership from the finance company to you.
Part exchange (PX)
Trading in your current car against the price of a new one. The PX value acts as a deposit — usually funded via the dealer at the time of purchase.
PCH (Personal Contract Hire)
Long-term car leasing. You never own the car and there's no purchase option at the end. Popular for company-provided vehicles and short-hold consumers.
PCP (Personal Contract Purchase)
A car-finance agreement with lower monthly payments and a final optional balloon payment. Includes mileage caps and end-of-term inspection.
Personal loan
Unsecured borrowing used to buy a car outright. No security means no repossession risk, but usually slightly higher rates for the same customer.
Representative APR
The rate offered to at least 51% of accepted applicants. What you see in an advert. Your personal APR may be lower or higher based on your profile.
Settlement figure
The amount required to close out an agreement early. Includes remaining principal plus any interest already accrued or contractually due.
Soft search
An eligibility check that doesn't leave a visible footprint on your credit file. Used by brokers to price-quote without harming your score.
Term
The length of the finance agreement in months. Longer terms lower the monthly payment and increase total interest paid.
Total amount payable
Principal plus all interest and mandatory fees over the full term. The clearest measure of how much a deal actually costs you.
V5C (Log book)
The DVLA's vehicle registration document. Names the registered keeper (you). It doesn't prove ownership on a finance deal — the finance company owns the car until the final payment.
Voluntary Termination (VT)
Your right under section 99 of the Consumer Credit Act 1974 to hand a car back and end an HP or PCP agreement once you've paid at least 50% of the total amount payable.