Glossary

A

• Adverse Credit

  Adverse credit simply means that for some reason, not necessarily any fault of your own, your credit record suggests you are in some sense not an ideal person to lend to. One general example of of loan applicants with adverse credit is that they are self-employed. As you can see, this is in itself not exactly horrifying, yet a loan company would see irregular payments to their account, no assurance of future income, and other obvious indicators of self-employment, and these are the kind of details that put them off. Therefore, if you do have an adverse credit rating the reasons can often be mundane, without any sort of intended put-down.

• Agreement Period

  The agreement period is how long your loan or lease contract runs for. Agreement periods vary so pay attention to the small print.

• APR

  APR, or annual percentage rate, is the percentage of the value of a loan that you have to pay back each year. The lower the APR you pay, the better the deal.

B

• Balloon Payment

  A balloon payment always comes at the end of a contract and it is the amount you have to pay if wish to buy the vehicle you got a loan for. If you get a flexible finance deal you can increase or decrease the value of the balloon payment, depending on how quickly and how much you want to pay on a month-to-month basis.

• BIK – Benefit In Kind

  BIK, or benefit in kind, is the tax you have to pay on a company car from your salary. Benefit in kind is the same thing as your P11D value. It is calculated by the list price of the car, delivery charges, car accessories, and C02 emissions amongst other things.

C

• Conditional Sale

  Financing a car by conditional sale is similar to a hire purchase scheme. Following an initial deposit, the person who takes on the conditional sale scheme must make regular monthly payments, and maintain and properly insure the vehicle. If these conditions are met (this is the conditional part of the phrase ‘conditional sale’) then the ownership of the vehicle is passed over after the final monthly repayment. During the period of repayment the lender may reposess the vehicle if there have been any defaults such as non-insurance of the car

• Contract Hire

  Contract hire means that you have leased a car for a preset amount of time at a preset monthly repayment rate. Contract hire is one of the simplest ways to obtain use of the car.

• Cost To Change

  This means specifically the cost to change your car for another one you have your eye on. Cost to change is therefore the difference in price between the car you have now, and the car you want.

• Credit Agreement

  If you sign a credit agreement, between you and the lender of the credit to buy the car you want, this means you have agreed to borrow money off them and also to make regular repayments to them. When you sign a credit agreement you will have a few days in which to think things over. This is known as a cooling-off period, within which you can walk away from the deal. However there are circumstances where, if you sign the credit agreement on the dealer’s/lender’s premises, you could possibly lose the right to a cooling-off period.