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So you’re ready to pick a new car from our extensive list on Nifti.ie, but certain words or phrases continue to raise an eyebrow. Car lease jargon can be tricky to get your head around, but with this simple explanation guide, we aim to make the process that bit easier. You’ll be on the road in no time with the help of Nifti.
Lease Term
The lease term is the contract terms of a lease agreement between Nifti and you as the person agreeing to lease a car. The legal contract includes lease terms to establish the period of time by which the lease will last, and the contractual obligations.
Hire Purchase
The traditional hire purchase or HP agreement is a credit agreement between you and the lender. With hire purchase, you hire the car and pay an agreed amount in monthly payments. You do not own the vehicle until you have made the final payment.
PCH
PCH or Personal Leasing is a straightforward and affordable way of having a new car when compared to buying a car outright. You don’t own the vehicle, but pay monthly installments for the length of time you use the car. With a Nifti Personal Leasing agreement, you can drive a new car for an agreed period of time, which is also known as a ‘lease period.’ Once the contract has finished, you return the car and order a new one. Check out our easy to understands explainer guide on Personal Leasing.
BCH
Business Contract Hire is a hire agreement between your business and our NiftiBusiness team. You don’t own the vehicle, but you avoid the hassle of deciding what to do with the vehicle at the end of the agreement or running an older used fleet. Simply return the vehicle once your contract is up and decide if you would like to start again. Check out our comparison guide on Personal vs. Business Leasing.
BCP
While not something we offer at NiftiBusiness, this is structurally similar to Contract Hire. Business Contract Purchase or BCP allows customers to make fixed monthly payments with the option of retaining the vehicle at the end of the contract.
PCP
PCP is a Personal Contract Plan, which is a form of hire purchase agreement. It is a car finance package that has lower monthly payments over three years compared to a Hire Purchase contract over the same period. With PCP you can have a flexible finance plan to suit your own circumstances. At the end of the period (usually 3 years) you can pay the balloon figure to own the car, negotiate a new PCP deal or walk away. PCP is not something we offer at Nifti. Read more about the key differences between car leasing and PCP.
Depreciation
Depreciation is the rate at which your car loses its value over time. Depreciation occurs because of the wear and tear that happens to your car. Unfortunately, most new cars lose between 40% to 50% of their value in the first three years of ownership. This is what makes lease agreements so popular. Depreciation will not be a problem for you with Nifti.
Lessee
A lessee is a person who rents the vehicle from Nifti or NiftiBusiness. The lessee must uphold specific obligations as defined in the lease agreement and by law.
Lessor
In this instance, Nifti or NiftiBusiness act as the lessor. A lessor is essentially someone who grants a lease to someone else. As such, a lessor is the owner of the vehicle leased under an agreement to the lessee.
Balloon Payment
A balloon payment is a larger one-time payment at the end of the loan term. If you have a PCP deal with a balloon payment, your payments may be lower in the years before the balloon payment comes due, but you could owe a large amount at the end of the loan. This is not something Nifti customers have to deal with.
Wear & Tear
Normal “wear and tear” is the expected reduction in performance of a part due to the car’s age, mileage and use. Common items include tyres, brake pads, and engine fluids. Many warranty providers exclude this kind of depreciation. Any damage that is beyond normal wear and tear is considered excessive. Check out our complete guide to fair wear and tear and how to prevent it.
Excess Mileage
Excessive mileage charges occur when the mileage limit of a leased vehicle is reached. Typically, the Nifti contract for the leased vehicle includes a total mileage limit upfront. If the vehicle’s mileage exceeds the agreed amount at the end of the lease or hire period, the leasing company will charge a mileage fee. It is important that you understand what annual mileage you undertake.
Mileage Allowance
Nifti and NiftiBusiness will agree and limit the number of kilometres you may drive per year. You can negotiate a higher mileage limit but it could result in a higher monthly payment. You will likely have to pay charges for exceeding the limit, if you return the vehicle.
Residual Value
The residual value, also known as salvage value, is the estimated value of the vehicle at the end of its lease term or useful life.
BIK
Benefit-In-Kind refers to the benefits that an employee receives that cannot be converted into cash but have a cash value. The best examples of this include provision of a company car.
Commercial Use
This describes vehicles primarily used for business, most of which would be designed to carry cargo, objects and work tools, although passenger cars can also be used for commercial use.
Personal Use
This describes vehicles used solely for personal reasons. Commuting, exploring and visiting family members would all be considered personal use.
Upfront Costs
An upfront cost is an initial sum of money owed in a purchase or business venture. There are some fixed transactional prices for set up in most agreements, and the deposit can also be classed as upfront.
Fleet Management
Fleet management for our NiftiBusiness users refers to the overall actions that take place to keep more than one vehicle running efficiently, on time, and within budget. Fleet managers monitor fleet activities and make decisions including asset management, dispatch and routing, and vehicle purchasing and disposal.
Early Termination
Early termination is when a customer wishes to terminate their lease contract before the end of the contracted term. With an early termination, the customer arranges with the finance provider to return the vehicle early for a set fee, which is calculated by Nifti or NiftiBusiness. Lease agreements are not designed to be broken, so you can expect penalties associated with early termination. We always advise that you think very carefully before canceling the agreement and find out precisely what these total costs would be.
Manufacturer Warranty
A manufacturer warranty is a legal agreement that ensures, in the unfortunate event of your car suffering any major mechanical problems within a certain period of time, the cost of repairs will be met by the manufacturer. The majority of new car warranties will last for three years, which should easily cover your Nifti lease term.
Lead Time
This is ultimately the time between the initiation and completion of a production process. Some cars have longer lead times than others, but our Nifti team will best advise on any particular vehicle you may have interest in.
If you have more questions or want to learn more about Personal Leasing, check out our Help and Advice page.