Car leasing terms explained

Car leasing terms explained For many people the car leasing process can be very complicated and there is a great range of jargon that is used. Some people may find that car leasing is the perfect option when they are looking to get a new car. It is important to establish whether a car leasing is a good option before committing to the terms and conditions of a contract. If a person is taking out a leasing agreement it is important that they understand all of the jargon that is used throughout the contract.One term that may be included in a contract is 2+23, what this actually means is that the first three payments will be required as an initial deposit and then there will twenty three regular payments after the deposit has been paid. Also in the contract could be the term balloon payment this is quite often found in many leasing contracts. This terms refers to the final payment that will be made at the end of a leasing agreement. If a balloon payment is part of the contract it will often mean that the monthly payments are lower. A contract hire is a finance arrangement that is relevant for companies that have registered for VAT. Such an arrangement will allow a business to reduce their risk to deprecation; the car will usually be handed back at the end of an agreement. Another term that commonly features within a leasing contract is GMFV, this stands for guaranteed minimum future value. This is a similar term to balloon payment and it provides a guarantee for the future value of the vehicle this is very useful for contact purchases. Other acronyms that also commonly used include WLC which stands for whole life cost, SMR stands for service, maintenance and repair, RFL stands for road fund licence and PPM stands for pence per mile. A popular referral point that could be within a leasing contract is Excess Mileage, this a cost that a lease holder will have to ay if they hire a vehicle and then go over the agreed mileage. It is important to be fully aware of the different terms that feature with contract hire and lease purchase agreements. If an individual signs a contract and does not understand it, they are still liable and the contract remains to be legally binding.