Car Loans Glossary

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• Sale And Leaseback

  Sale and Leaseback is a good way for a company to increase its available cash if it owns a fleet of company cars. The fleet is purchased from the company in question at proper market value (the ‘sale’ part) and the company then leases back (leaseback) the fleet by whatever funding scheme it sees fit. With sale and leaseback the problem of depreciation is therefore put onto the buyer of the fleet, and the company gets an instant cash reserve increase.

• Secondary Rental

  Secondary rental is the term for when your financing deal has ended, but you decide you want to arrange another deal on the same car. Secondary rentals are nearly always on much better terms than the original deal.

• Secured Loan

  If you have a secured loan to buy a car it is very likely that the loan has been secured on the car itself. This means that that the car is a guarantee against you defaulting on your payments. If you can’t keep up the payments on the secured loan, the car will be repossessed by your creditor and sold to cover your debt.

• Short Term Contract Hire

  Short term contract hire, also known as daily rental, is a time-limited form of contract hire which you might wish to consider if you need more vehicles to fit a need in the immediate future. Generally speaking, short term contract hire is negotiable for up to a year.

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• Trade Value

  In motoring parlance ‘trade’ means a car trader, so trade value means how much a car is worth to a car trader. Trade value is always less than you would see for a private sale because traders need to be able to make a profit on the cars they sell. If you are only interested in the money, you should obviously sell privately, but trade value might be acceptable if you want to do a part exchange deal.

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• Unsecured Loan

  An unsecured loan is granted based solely on your ability to repay it. If you do not keep up repayments then this does not mean you are at risk of losing the car though repossession. The APR on an unsecured loan tends to be higher because the lender does not have any of your collateral as security, so it sees this type of loan as a higher risk.