Car Finance and Car Loans Glossary

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Click to view the explanation of each term

Daily Rental

Daily rental is similar to contract hire, except it is (as the name says) for shorter periods. Daily rental is a good solution when you want to get a car to satisfy short-term needs.
Delivery Charge

The delivery charge is levied for delivering a car from where it was made to the car dealership that will sell it. All car manufacturers bill a delivery charge for taking vehicles to dealers.
Depreciation

Depreciation is the term for the diminishment of your car’s value over time. A variety of factors can affect your car’s depreciation, not just make and model, but levels of trim, colour, and optional extras such as a satnav can all have an affect. If you plan on keeping a car for a long while, then depreciation may not be a factor in your choice of car, but if you are the type of person who likes to change your vehicle every couple of years then it most certainly should be.

Equity

Equity, in this instance, is your ownership interest in a vehicle. Equity is calculated by subtracting the amount of your loan you have yet to pay off, from the overall price of the car.

Finance Lease

With a finance lease you make repayments for a vehicle over the length of its economic life, and you can usually offset the rentals against taxable profit. With a finance lease you can also usually reclaim the VAT on the rentals.