Car Loans Glossary

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D

• Daily Rental

  Daily rental is similar to contract hire, except it is (as the name says) for shorter periods. Daily rental is a good solution when you want to get a car to satisfy short-term needs.

• Delivery Charge

  The delivery charge is levied for delivering a car from where it was made to the car dealership that will sell it. All car manufacturers bill a delivery charge for taking vehicles to dealers.

• Depreciation

  Depreciation is the term for the diminishment of your car’s value over time. A variety of factors can affect your car’s depreciation, not just make and model, but levels of trim, colour, and optional extras such as a sat-nav can all have an effect. If you plan on keeping a car for a long while, then depreciation may not be a factor in your choice of car, but if you are the type of person who likes to change your vehicle every couple of years then it most certainly should be.

E

• Equity

  Equity, in this instance, is your ownership interest in a vehicle. Equity is calculated by subtracting the amount of your loan you have yet to pay off, from the overall price of the car.

F

• Finance Lease

  With a finance lease you make repayments for a vehicle over the length of its economic life, and you can usually offset the rentals against taxable profit. With a finance lease you can also usually reclaim the VAT on the rentals.