This section is designed to clarify commonly used terms and acronyms form the leasing industry.

[a-g] [h-o] [p-z]

H

Hire purchase

A finance agreement allowing for the purchase of a vehicle through payments over a specific period covering the cost of the vehicle plus interest charges. Part of the capital cost of the vehicle may be deferred into a 'balloon' payment at the end of the agreement. As with Finance Lease the customer assumes the residual risk. Title and ownership of the vehicle passes when the last finance payment has been made.

Hybrid vehicles

Hybrid vehicles are normally powered by a combination of petrol or diesel and electricity. This saves fuel consumption and produces less carbon dioxide emissions. Hybrid electric vehicles recharge their batteries during normal operation; so all the driver needs to do is fill up with fuel when necessary.

L

Lease

An agreement where a customer has the use of goods but does not own them.

Lease purchase

A funding agreement where the company acquires ownership once all the payments have been made. Part of the capital cost of the vehicle may be deferred into a 'balloon' payment at the end of the agreement. As with Finance Lease the customer assumes the residual risk.

Lessee

A customer in a lease agreement.

Lessor

The owner of the goods in the lease agreement.

List price

The manufacturer’s, importer’s or distributor’s list price inclusive of all ‘’on the road’’ costs, on the day before first registration. Accessories fitted before registration are generally included as are those costing £100 or more fitted after registration.

M

Mileage allowances

An employee who undertakes business mileage in his or her own car may receive a mileage allowance from the employer.  This is designed to cover all the costs of owning and running a car and is paid based on a pence per mile rate.

N

National insurance contributions

Class 1 contributions are payable in respect of earnings from an employment or office. Certain payments in kind are chargeable to Class 1 on both the employer (secondary contributions) and the employee (primary contributions).

O

Open Book leasing

Agreement between customer and supplier where elements making up the rental cost are separated out and subject to customer scrutiny. This can also include an element of profit sharing.

Operating lease

A lease where risks and rewards of ownership are borne by the lessor, e.g contract hire. Normally defined as a lease other than a finance lease.

Outsourcing

Passing a significant range of company functions previously carried out in house to a third party supplier. With vehicle fleets, the fleet management company will typically take over a full range of operational aspects such as servicing, repair and maintenance as well as providing a high level of driver support.