If you – like many – are unsure of some of the terminology that is used by leasing companies, dealerships and brokers, we are here to help.
In what can seem like a maze of jargon, Rosedale Leasing are here to make sure that all of our clients are in no doubt as to what their leasing agreement terms actually mean.
Leasing jargon explained – No-Nonsense Guide!
It is our mission to offer complete transparency, with everything from the initial, detailed quotation, right through to the order process.
Initial payments and lease term configurations are some of the most commonly misunderstood areas – we hope that you find our guide useful!
What is an initial payment?
An initial payment refers to an amount of money that is paid in the first month of your lease agreement. This payment may be subject to VAT – our online quotation will detail this – and also a documentation fee.
Why are initial payments not referred to as deposits?
Initial payments are not given back – they do not form any part of a repayment plan. A business or personal leased vehicle is handed back at the end of the term.
How are initial payments calculated?
Initial payments are usually made up of either three or six months’ payments in advance – the more you pay at the start, the less your regular monthly payment is. Your initial payment may also be subject to a documentation fee which will vary company to company.
Some companies will advertise nine payments or even sometimes a specific cash amount as an initial lease payment so it is always important to compare the overall cost of your lease when you are shopping around.
What is a spread rental?
A Spread rental means that you pay an initial payment and then you follow with regular monthly payments until the end of the contract.
For example, you if you have a six payments in advance contract, you would make your first payment – which would be made up of your six payments and your documentation fee if applicable – then you would make a further 23 payments on a 24 month agreement, or 35 payments on a 36 month agreement.
These terms would be known as a 6 + 23 and 6 + 35 leasing agreement respectively.
What is a terminal pause agreement?
Terminal pause agreements are not as popular these days as a lot of people and businesses prefer to spread their costs over the term.
A terminal pause offers an end of term payment holiday for those who prefer to save at the end of the term for their next contract’s first initial payment.
For example, for a 36 month agreement, where a client has an initial payment of 3 months in advance plus a documentation fee, there would be three months at the end of the contract where there are no payments due – this is known as a 3 + 33 leasing agreement.
What is the right lease agreement for me?
Rosedale Leasing treat all requirements as individual – once you have browsed our website, feel free to call any one of our experienced team for help and advice on 0845 148 3012.