Automobile finance and lease offers have gotten more and more extra widespread throughout the UK. 

The enticing proposition to drive a brand new automotive for a month-to-month charge is interesting to drivers who could not need to commit to purchasing a automotive or be capable of afford one.

Nevertheless, selecting the correct finance deal could be extremely complicated and traumatic.

There’s a plethora of jargon peppered all through these paperwork that may exhausting to know, which may lead to you signing up for a deal.

Based on YouGov knowledge, 85 per cent of automotive homeowners say that the concept of being in debt is traumatic, but within the final yr some 2.four million vehicles had been purchased utilizing finance choices.

A 3rd (31 per cent) of highway customers say that monetary issues confuse them, and it’s potential that some car-buyers are committing to a finance contract with out being totally conscious of what they’re agreeing to.

To assist motorists not make a flawed determination or join one thing they do not full perceive Automobile Store has revealed what the important terminology and jargon is.

Commenting on this, Kirk O’Callaghan, Operations Director at Automobile Store, says: “Shopping for a automotive can look like a minefield to many individuals, as there are such a lot of issues to think about and to keep away from and the monetary dangers can really feel fairly excessive. 

“For these of us not used to coping with contracts regularly – which is most of us – they’ll usually look like they’ve been written in one other language.

“We predict it’s actually necessary to make sure that folks know what they’re signing as much as earlier than committing to purchasing a automotive on finance.

“We hope this data helps these trying to buy a brand new or used automotive, and keep in mind, if unsure, make sure that to ask!”


APR stands for Annual Proportion Fee. This determine signifies the annual fee of curiosity hooked up to your mortgage (together with any charges) so you may decide the general annual value of your finance package deal. It’s all the time finest to examine the APR in addition to the overall quantity payable, as that reveals how a lot you’ll really pay over the interval of the mortgage.


This refers back to the worth your automotive loses over time on account of age, mileage and put on and tear.

Fastened Fee

A set fee implies that your month-to-month funds are unaffected by rate of interest adjustments and can stay the identical every month.

Flat Fee

That is the month-to-month rate of interest you’ll pay, and doesn’t embrace admin charges. Watch out for complicated this with the APR as this doesn’t take account of any charges.

Hole Insurance coverage

When you’ve got an accident or your automotive is stolen, customary automotive insurance coverage will solely pay out the equal worth of the automotive on the time the incident occurred – however you’ll nonetheless be liable to repay any finance settlement you took out in your automotive in full.

Because the title suggests, hole insurance coverage covers the distinction between the insurance coverage payout and the quantity left to pay.

Rent Buy

A type of automotive finance the place you conform to make month-to-month funds for a hard and fast time period. As soon as your remaining fee has been made, you personal the automotive. Private loans work in the same manner, however you personal the automotive from the start.


Stands for Private Contract Buy. This can be a widespread type of automotive finance and infrequently sits alongside rent buy. You set down a deposit after which pay month-to-month instalments; when the settlement involves an finish, you may both pay the balloon fee to maintain the automotive, or just hand it again and transfer on.

Residual Worth

That is the long run worth of your car at a sure time limit. Typically used for calculating Assured Minimal Future Values. 

SAF Specialist Automotive Finance

SAF is a scheme launched by the Finance and Leasing Affiliation to allow retailers to check their groups to make sure they’re educated to an permitted degree.

All related workforce members should be re-tested every year. That is to make sure they perceive the merchandise they’re providing and provides good recommendation to customers.

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