This is a fee usually charged at the start of the finance agreement. It's paid to lenders to cover their administrative cost, such as issuing relevant documentation and setting up the finance. It's also known as an acceptance fee.
The agreed fixed length of time in which you have to repay the finance.
This refers to the amount of mileage a car on finance is allowed to drive each year. Some finance agreements have a mileage limit, which is used to calculate the Residual Value.
Annual percentage rate, also known as interest rate. This is how much extra you’ll have to pay back on top of the amount you borrow. This is usually represented as a percentage of the amount outstanding.
Any money owed that’s overdue.
This is a final payment at the end of some financing agreements. This payment allows you to take ownership of the car. This figure will be worked out and agreed at the start of the agreement and is often based on the Residual Value.
This is the agreement between you and the financing lender.
This is the historical record of all your credit borrowing.
Also known as a credit score, this is based on your past credit history and existing debt. Lenders use the information held in your credit file to decide what rates to offer you.
When lenders view your credit history and determine whether you can afford to repay the debt.
A deposit is the initial payment you put down towards the car at the start of the finance agreement. The larger your deposit, the lower your monthly payments, and the more likely you’ll be accepted.
A deposit contribution is a subsidy offered by the vehicle manufacturer or dealer, which can be put towards your finance agreement.
This is when you decide to end the finance agreement early, and pay off the rest of what you owe.
Once you’ve paid all debts associated with your car, it then becomes equity because it’s an asset you own.
This is the agreement which confirms the terms of the finance contract. It usually explains the monthly payments, cancellation terms and what happens at the end when the finance has been repaid.
A finance lease agreement is a contract type where ownership of the property is transferred to the lessee at the end of the lease term upon settlement of the balloon payment.
This is a set interest which remains unchanged throughout the term of the finance agreement.
Guaranteed future value – this is what the car will be worth at the end of the finance term. It also describes the cost of balloon payment.
This is usually a parent or close relative who agrees take on the debt if you can’t longer keep up with the repayments. A guarantor is usually required for specialist or guarantor loans, loans for younger people or those with minimal or no credit history.
This is sometimes shortened to HP. This finance deal normally involves putting down a deposit and then is repaid with fixed monthly instalments. When the debt is fully paid, title of the car is passed over to the customer.
It’s possible to apply and sign a finance agreement with two or more people. Together, they are responsible for repaying the loan or finance agreement.
A car lease is a method of obtaining a new or used car that involves only paying for a portion of the car’s actual cost as opposed to having to pay for the car in its entirety. So when you lease a new car you are only paying for the portion of the car you are using over the number of years in your lease agreement.
An operating lease is an agreement to finance equipment for less than its useful life. The lessee can return equipment to the lessor at the end of the lease period without any further obligation.
Trading in your old car and using it as a contribution towards a new one.
A quote or quotation is a written summary of the finance offer and provides all relevant information clearly laid out. A quote is not legally binding, and an application and approval process must be completed prior to entering into a contract. A quote will usually details how long it is valid for e.g. 30 days.
This is the estimated value of the car at the end of your loan or finance agreement. Residual values are usually calculated as a percentage of the vehicle price, but are expressed as a dollar value.
This is the length of time you’ll be paying off the finance agreement and is usually expressed in months e.g. 84 months.
This is the total amount, which you’ll repay the lender including the loan, total cost of credit, interest and fees.
The two vertical struts sitting either side of and supporting the windscreen. Also known as A-posts.
Antilock Braking System – A computerised system that prevents the wheels from locking during emergency braking, improving steering control and reducing stopping distances.
Adaptive Cruise Control – An advanced automatic vehicle speed management system that monitors traffic ahead and reduces or increases the car’s speed based on the flow of traffic. Also known as Intelligent Cruise Control. See also Mercedes-Benz’s Distronic.
A bag designed to protect vehicle occupants from injury in the event of a vehicle collision and which inflates on impact. Airbags can be found in the dashboard, at knee level, in the sides of seats, in the doors and elsewhere, and typically inflate with nitrogen gas at a speed of 1/20 of a second (faster than the blink of an eye). They deflate immediately following inflation, absorbing the impact as they do so.
A suede-like material that is used mainly in premium vehicles. The grippy yet soft touch nature suits premium sports cars in particular.
Intelligent All-Wheel Drive – Car operates in 2WD to maximise fuel economy during normal operation, but if wheel spin is detected 4WD is engaged to increase traction and vehicle stability.
Converts mechanical energy from the engine into alternating electrical current for the 12-volt battery, which powers the vehicle’s electrical systems.
Automatic transmission – A gearbox that shifts through gears automatically, doing away with the need for a manual clutch and gearstick.
All-Wheel Drive – When power is fed to all four wheels, otherwise known as four-wheel drive or 4WD.
Automatic Windscreen Wipers – Wipers that come on when an infrared optical sensor mounted on the windscreen detects changing levels of light reflected by the glass as a result of rain water. The system adjusts the wiper speed in response to the level of water.
The vertical struts running from the roof to the waist-line of a vehicle, between the front and rear side windows. Provides strength to the mid-section of the vehicle.
Brake Horsepower – The measure of an engine’s horsepower output before frictional losses caused by components such as the gearbox, alternator and differential.
The third strut running from the roof to the waistline of a vehicle, after the A-pillar and B-pillar. On saloons and coupés, the C-pillar is the final such post and supports the rear window.
A two-door car with a fixed roof, which is often shorter and more steeply angled at the rear than its saloon equivalent, giving them a sporty look. Coupés often have limited space and headroom for rear passengers.
The bottom of the engine housing the crankshaft, which is driven by the pistons attached to it via connecting rods.
An automated system that keeps the car at a constant speed set by the driver. (See also ACC.)
The cylinder head (often abbreviated to “head”) sits above the cylinders on top of the cylinder block. In most engines, the head houses the cam shafts and valves with ports that allow air to enter the cylinder, and exhaust gases to escape.
Found on larger cars, such as SUVs and estates, the D-pillars are the vertical (or near vertical) struts found either side of and support the rear window.
Suspension components often referred to as “shock absorbers” that control the movement of the car rising and falling as it travels.
Direct Diesel Injection – A diesel engine that sprays atomised fuel directly into the combustion chamber of each cylinder, improving performance and fuel economy.
A sticker or transfer used to decorate or personalise a vehicle.
The proportion of a vehicle’s purchase price that is lost over time.
An internal combustion engine that runs on diesel fuel. Diesel engines do not use spark plugs to ignite the fuel; instead the fuel is compressed in the cylinders until it reaches a temperature hot enough for combustion. Diesel engines work at a much higher compression than petrol engines, generate higher torque and use less fuel.
A mechanical device that allows the driven wheels of a car to turn at different speeds, splitting engine torque between the wheels so that the outside wheel in a corner can rotate faster than the inside wheel.
Engine capacity, expressed in cc (cubic centimiters).
Double Overhead Camshaft – An engine design with two camshafts positioned at the top of the cylinder heads, one to operate the intake valves and one to operate the exhaust valves.
Diesel Particulate Filter – Traps particulates in a diesel-engine vehicle’s exhaust.
Daytime Running Lights or Daytime Running Lamps – Low energy lights fitted to the car that switch on automatically whenever the vehicle is in operation to increase the visibility of the vehicle to other road users (rather than to illuminate the road or indicate a manoeuvre).
The kerb weight of a vehicle, which excludes occupants and cargo, with the further exclusion of consumables such as fuel, oil and water.
Dynamic Stability Control – see Electronic Stability Control (ESC) or Electronic Stability Program (ESP).
Direct-Shift Gearbox –Dual-clutch gearbox which dispenses with a conventional clutch pedal and allows either full automatic operation or semi-manual control via the floor-mounted selector and steering wheel paddles.
A car that will run on one or more fuel sources. LPG/Petrol conversion is a common example.
Extended-Range Electric Vehicle – a vehicle that uses an electric motor for propulsion but also uses an internal combustion engine to generate electrical power and maintain a minimum level of charge in the battery when it gets low. Unlike a Plug-in Hybrid, an E-REV doesn’t use the petrol/diesel engine to directly power the wheels.
Electronic Stability Control – An electronic program that applies the brakes to a specific wheel when a loss of steering control is detected. Helps combat understeer and oversteer events to improve safety. Also known as Dynamic Stability Control (DSC) or Electronic Stability Program (ESP).
Electronic Stability Program – see ESC.
A car with an extended load space behind the rear seats, accessed by a door at the rear. Known as “station wagons”.
Electric Vehicle – A blanket term to describe any type of vehicle that is primarily powered by an electric motor. Can include Extended-Range Electric Vehicles (E-REVs), Plug-in Hybrids (PHEVs) and Hydrogen Fuel Cell (HFC) vehicles.
Full Dealer Service History – as FSH (see below) but the service stamps have been acquired from a registered dealer.
Full Service History – often seen in used car adverts to denote a full log of regular maintenance and annual service stamps from service outlets.
A system by which atomised fuel is sprayed directly into the combustion chamber of each cylinder of the engine.
Front Wheel Drive – When engine power and torque is channelled to the front wheels only.
Global Positioning System – The network of satellites that provides the location and time information used by a vehicle’s Satellite Navigation (Sat Nav) system. (See also Sat Nav/Satellite Navigation.)
The kerb weight of a vehicle or trailer plus the maximum load that can be carried safely for use on the road, including occupants and cargo.
Grand Tourer – A car that is designed for long-distance driving. Usually used as a prefix or suffix on high-performance, luxury vehicles.
A car with a boot lid that incorporates a large section of the rear section of the car, including the rear window. Hatchbacks offer easier access to the cargo (luggage) area.
A vehicle that is powered by both a petrol engine and battery-powered electric motors.
Internal Combustion Engine vehicle – abbreviation increasingly used to differentiate vehicles purely powered by petrol, diesel or other form of combustible fuels from electric or hybrid vehicles.
A suspension system that allows each wheel on the same axle to move up and down independently of the other.
A system that cools hot intake air that has been compressed by either a turbocharger or supercharger before entering the engine, increasing its density and therefore the engine’s power output.
The international standard attachment for child safety seats which permits a compliant seat to be fixed to anchor points on the car rather than secured solely by the seatbelt.
Slang for an old, dilapidated automobile.
The weight of a vehicle or trailer including fluids such as fuel, oil and water but excluding occupants and cargo. See also Dry weight and Gross weight.
Kilometres per Hour – Measure of speed that denotes the number of kilometres travelled in one hour.
A simple form of suspension made up of a number of curved metal strips clamped together.
Light Emitting Diode – a type of light source that is often used on modern cars for low-beam headlights, brake lights, indicators and daylight running lights.
Limited Slip Differential – A standard differential will split power to the driven wheels via the path of least resistance, meaning if one wheel is off the ground or on a slippery surface it will be fed 100 per cent of the power and the vehicle will go nowhere. A limited slip diff prevents all the power being transmitted to the spinning wheel, instead allocating a proportion of the power to the other driven wheels that have grip.
Liquid Petroleum Gas – A flammable mixture of propane and butane that can be used as a vehicle fuel.
Long Wheelbase – A lengthened version of an existing vehicle chassis, often available as an option for luxury saloons such as the Mercedes Benz S-Class.
A type of suspension in which a coil spring is positioned over a shock-absorbing strut. The benefits are fewer parts and less weight than conventional suspension systems and as such is found on most vehicles.
The vehicle make, or brand (e.g. BMW, Mercedes, Rolls-Royce).
The widely adopted structure of modern cars where the body supports the car’s structural load, rather than relying on a separate chassis.
Miles Per Gallon – The number of miles a vehicle can travel per gallon of fuel consumed. Officially expressed as urban (city), extra urban (rural roads) and combined (a mix of city and rural).
Miles Per Hour – Measure of speed that denotes the number of miles travelled in one hour.
Multi-Purpose Vehicle – a vehicle based on a family-car chassis and designed to provide maximum cabin space and versatility. Also known as People Carriers (UK) and Minivans (USA).
A type of suspension using three or more lateral arms and one or more longitudinal arms, allowing improved ride and handling but at the cost of complexity and expense.
An engine in which the cylinders draw in the fuel mixture under atmospheric pressure by the suction action of the pistons during induction, rather than it being forced in by a turbocharger or supercharger.
A car body style where the rear of the car is short or the rear window is more upright than normal. Can apply to a saloon, coupé or hatchback body style.
Noise, Vibration and Harshness – A measure of the noise and vibration characteristics of vehicles as well as a subjective measure of the quality of the ride.
A figure indicating the antiknock properties of a fuel expressed and MON or RON.
Device used to record mileage throughout a vehicle’s lifetime. Also known as a ‘milometer’.
On The Road – Related to car prices, this refers to the cost of the car as it is driven off the dealership forecourt. It starts with the retail cost of the car to which additional fees required to drive the car away including taxes, insurance, delivery fees, etc. are added.
A condition in which, as the car corners the rear wheels lose grip, provoking the possibility of a tail-out slide.
Plug-in Hybrid Electric Vehicle – a type of Hybrid vehicle where the propulsion battery can be plugged into an electrical supply and charged.
The vertical or near-vertical struts that run from the roof to the waist of a vehicle, increasing body strength. See A-pillar, B-pillar, C-pillar and D-pillar.
In manufacturing, refers to base components of a car including its chassis, floorpan, suspension and steering system. A single manufacturer can create a platform that is shared across a number of its own models e.g. a family car and an SUV could share the same underpinnings.
Steering that is aided by electric or hydraulic motors. This reduces the effort required by the driver to turn the wheels, particularly at low speed.
An alternative measure of engine power output to BHP, used primarily in Continental Europe. PS comes from the German word ‘Pferdestärke’, meaning ‘horse strength’). To convert PS to BHP, multiply the PS figure by .986.
An alternative term for tinted windows.