Glossary - Finance

Finance Glossary

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | X | Y | Z |
A

Agreement period

The agreement period is how long your finance plan runs for. Agreement periods vary, and are clearly stated on your quote and finance agreements.

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Annual mileage

This is the number of miles you expect to do in one year. With the i-deal finance plan, you select a maximum annual mileage from anywhere between 5,000 and 35,000 miles.

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Approved repairers

These are typically a network of garages whose work and charging structures have been scrutinised and found to be satisfactory by your insurance company. If you are involved in an accident, check your policy documents to see how to find a list of approved repairers, or contact your insurance company for a list of authorised repairers in your area.

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APR (Annual Percentage Rate)

The APR is a measure of how much a given loan will cost you in interest over a calendar year. The figure for the APR takes into account all of the costs associated with the loan, and standardizes the way the rate is expressed.

When APR figures are quoted on promotional material, they will be accompanied by the term 'representative APR'. This is because stating the APR is a legal requirement, and the rate stated must be that which is offered to at least half of the loan applicants that get approved for that loan, hence making it the ‘representative’ rate offered.

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B

Balloon payment

A balloon payment always comes at the end of a finance contract like Fiat i-Deal. It is the amount you have to pay if you wish to buy and keep the vehicle that you have taken out a contract on.

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BIK (Benefit in Kind)

Benefit in Kind is the figure provided to the customer to assist them in their reporting to the tax office and is used to assess the amount of tax a driver will pay as a result of having a company car.

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C

Car loan

A car loan is an amount of money that is lent to you so that you can purchase a car.

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Cost to change

This is the amount it will cost you to change your car. It’s the difference in price between the current value of the car you have now and the car you want.

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Courtesy car

If your car is off the road following an accident, your insurer may provide you with a car to use – free of charge - until your own car is repaired. There is likely to be an extra cost if you take third party cover.

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Credit agreement

If you sign a credit agreement between you and the lender of the credit to buy the car you want, this means you have agreed to borrow money off them and also to make regular repayments to them to pay back the loan in full.

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D

Deposit

This is the amount of money that you pay towards the price of the car before you start making your monthly payments. It’s a contribution by the buyer to the purchase price.

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Depreciation

This is what happens to your car’s value over time. A variety of factors can affect your car’s depreciation: not just the make and model, but also things like the accessories, optional extras, the mileage you do, and the way in which you maintain your vehicle.

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E

Equity

Equity is the value of your financial interest in a vehicle, calculated by subtracting the amount of the loan you have yet to pay off from the current value of your car.
If the actual value of your car exceeds the car’s guaranteed minimum future value, the extra money is equity that can be used as a deposit on your next car.

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F

Fixed interest rate

This is when the rate of interest you pay on a personal loan is fixed at the time you borrow money. The main advantage of a loan with a fixed rate of interest is that you know exactly how much you’ll be repaying each month, and that the amount remains the same for the life of the loan. All Fiat Financial Services loans feature a fixed interest rate.

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G

GAP (Guaranteed Asset Protection)

With guaranteed asset protection (GAP) insurance, if your car is written off you can cover the difference between what the insurance company will pay out on the car and the amount you owe the loan issuer.
For example, if you still owe £1,000 on the written-off car and the insurance company values it (and pays out at) £500, then not only are you £500 out of pocket, but you also no longer have a car. GAP insurance would ensure you are covered for the remaining £500.

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H

HP (Hire Purchase)

Hire Purchase is a loan linked to a specific purchase such as a car. It’s a way of using the item before payment is completed - once you sign the agreement you can drive the car away the same day.
An HP contract involves an initial deposit, or 'down payment'. You then 'hire' the car you are buying for a fixed period, during which time you pay for it in monthly instalments, plus interest. The car is yours to ‘purchase’ at the end of the agreement.
As the purchaser, you won't own whatever you're buying on HP until you complete the payments.

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HPI (Hire Purchase Information)

HPI provides a search facility of the database maintained by HPI Limited. This search will report, among other results, whether a vehicle is subject to any interests of another party, usually another financial services provider.

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I

I-deal

This affordable and flexible way of buying a car is perfect if you don’t have a large deposit. Monthly repayments are kept low, because there’s a final lump sum payment at the end of your agreement. With i-deal you always get a guaranteed future value on your car, so you are protected from the fluctuating trends of the car market.

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M


Minimum Guaranteed Future Value (MGFV)

Minimum Guaranteed Future Value (MGFV) is the guaranteed minimum amount that your car will be worth at the end of your financial agreement. It’s also known as the guaranteed future residual value.

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N

Negative equity

Negative equity means the amount of money you owe on a car is more than the car is worth. This can happen if you borrow more than the value of the car at the start of the agreement, or if you don’t put down any deposit and/or take the finance out over a long period. Even if you sell the car on, you will still be left owing the money on the loan that you can’t cover with the sale of the car. GAP insurance will help protect against negative equity in the event of your vehicle being written off.

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O

OTR charges

The total On The Road price includes VAT, number plates, vehicle registration fee (VRF), twelve months road fund licence (RFL), and manufacturer’s warranty.

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P

Part exchange

Part exchange is the term used when you put your own car down as a payment towards a new car that you want to buy.

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Personal Contract Hire (PCH)

Also known as personal leasing, Personal Contract Hire is a long-term rental agreement. Essentially, you only make monthly payments on part of the car’s value, and at the end of the contract you return the car without any further obligations.

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Personal Contract Purchase (PCP)

Our Personal Contract Purchase plan is called Fiat i-deal. Simply choose the car you wish to purchase, agree your annual mileage and decide your agreement term of between 20 and 48 months.
Based on your chosen term and mileage, Fiat Financial Services will determine the Guaranteed Minimum Future Value (GMFV) of your car at the end of your agreement. The GMFV is deferred to the end of the agreement and is the optional final payment.
The GMFV and any deposit are deducted from the price of your car. You make regular payments based on the remaining balance plus the agreement interest.
At the end of the agreement, just choose from one of the following options:

  1. Renew. Choose a new car from your dealer and use any excess value over the GMFV towards your deposit. You can trade in your old car or sell it privately.
  2. Retain. To keep your car, you only need pay the GMFV.
  3. Return. Simply return your car to Fiat Financial Services in good condition and within the agreed mileage.

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R

Return to Invoice

This insurance protection covers the shortfall between what the insurance company will pay out on the car and the amount you owe the loan issuer - up to a maximum of the original invoiced price of your vehicle- in the event of your Fiat being stolen or written off.

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