Common Leasing Terms Explained
Understanding car leasing doesn’t have to be complicated. This glossary explains key terms in a clear, easy-to-follow style, helping you make confident decisions about your next vehicle. No jargon, no confusion – just simple explanations you can trust.
Agreement Term
The length of your lease contract, usually between 24 and 48 months. This is how long you’ll have the vehicle before returning it to the finance provider.
Annual Mileage
The number of miles you agree to drive each year as part of your contract. It affects your monthly payments and the car’s residual value. Going over this limit will usually mean paying an excess mileage charge.
BVRLA (British Vehicle Rental & Leasing Association)
The trade body that sets the standard for the leasing industry. As a BVRLA member, Gateway2Lease follows strict guidelines on fairness, transparency, and customer care.
Business Lease
A lease agreement taken out by a VAT-registered business. It often comes with tax benefits.
Contract Hire
The most common form of leasing. You pay a fixed monthly amount for a set term, then return the vehicle at the end – simple, flexible, and hassle-free.
Depreciation
The drop in a car’s value over time. When you lease, you don’t need to worry about depreciation – it’s already factored into your monthly payments.
Early Termination
Ending your lease before the agreed term. It’s possible, but there’s usually a fee involved, as the finance company will need to cover the remaining balance.
End of Contract
When your lease term finishes, you’ll return the vehicle to the funder. They’ll inspect it, check for fair wear and tear, and confirm the mileage – easy and straightforward.
Excess Mileage
A small per-mile charge if you exceed your agreed mileage limit. The rate is stated in your lease contract, so there are no hidden surprises.
FCA (Financial Conduct Authority)
The organisation that regulates the UK finance industry. Gateway2Lease is FCA-authorised, so you can be confident your agreement is fair and compliant.
Finance Provider
The company that owns the vehicle and provides the lease. Gateway2Lease works with a range of trusted UK funders, ensuring competitive pricing and flexible options.
G2L Score
The G2L score is an algorithm that scores each lease deal out of 10, helping you compare deals and spot great value. It considers factors like monthly cost, initial rental, mileage, and contract length to a give quick, easy-to-understand rating.
Handover
The exciting bit! The point at which your new leased vehicle is delivered to your door, ready to enjoy.
Initial Rental
The first payment you make on your lease – similar to a deposit, but it’s not refundable. It’s usually equivalent to 3, 6, or 9 monthly payments, and affects the cost of your remaining instalments.
Maintenance Package
An optional extra that covers servicing, tyres, and general wear and tear. It keeps your vehicle in top condition and helps spread maintenance costs evenly.
Personal Contract Hire (PCH)
The leasing option for private individuals. You drive the car for a fixed term, make monthly payments, then hand it back at the end.
Quote
A tailored price based on your chosen vehicle, mileage, term, and initial rental. We’ll always give you a clear, transparent quote with no hidden extras.
Residual Value
The estimated value of the car at the end of your lease term. It helps determine your monthly payments – higher residual value usually means lower monthly costs.
Road Fund Licence (RFL) / Vehicle Excise Duty (VED)
Commonly known as road tax. It’s included in your lease agreement for the full term, so you don’t have to worry about renewing it each year. Any government increases to this tax during your lease will be passed on to you.
Wear and Tear
Refers to the expected, fair use of a leased car. When your vehicle is returned, it’s inspected using BVRLA fair wear and tear guidelines. Light scratches or small stone chips are fine within the threshold. Major damage or neglect may incur charges.
Ready to Lease Your Next Car?
Ready to start your search for your next lease car? Browse our special car lease offers. If you’re new to leasing and want to learn more, take a look at our other easy-to-follow car leasing guides.
