Sometimes loan and leasing terminology can be confusing, which is why we have put together a New Zealand loans and leasing glossary so you can make sense of it all before you sign on the dotted line.

LCV
This stands for Light Commercial Vehicles such as Vans, utes, 4x4 and trucks less than 3.5 tonnes.

HCV
This stands for Heavy Commercial Vehicles and refers to trucks over 3.5 tonnes and trailers.

Vehicle Lease
This is a contract that allows a vehicle to be rented for a stated time by the owner (the lessor) to the user (the lessee).

Fleet Lease
This is a generic term that generally describes a vehicle lease for a corporate or fleet environment.

Finance Lease
This type of lease gives the lessee (you) the right to buy the vehicle at the end of the lease at a pre-agreed amount. The lessee also takes on all the risks and benefits incidental to ownership of the motor vehicle, including servicing and maintaining the vehicle.

Excess Mileage Fee
This is a flat fee that the lessee pays at the conclusion of the lease if they have gone over the agreed mileage limit.

Operating Lease
This type of lease is used mainly by large and medium sized businesses and provides less ownership risk plus the vehicle is fully serviced and maintained.

Early Termination Fee
The amount you will have to pay if you break the lease early.

Residual Value Risk
This is the risk associated with the market value of the vehicle at the end of the leasing period and is less then the residual value embedded in the lease calculation.

MSRP
Manufacturer's Suggested Retail Price.

Scheduled Servicing Costs
The costs associated with servicing the lease vehicle as instructed by the vehicle's manufacturer.

Reconcilable Components
Refers to costs that may be included in the lease agreement.

Lessor
This is the company leasing the vehicle out to you.

Lessee
This is you, the person (or company) that is wanting to lease a car for personal or business use.

Contract
An oral or written agreement between two parties, that is enforceable by the law. A contract needs to be offered and accepted to be legally binding.

Credit History
A record of personal or business open and fully repaid debts. A credit history helps a lender to determine whether a potential borrower has a history of repaying debts in a timely manner.

Default
Failure to make loan, lease or mortgage payments on a timely basis or to comply with other loan/lease requirements.

Documentation / Establishment fee
A fee that is sometimes charged by the lease company.

Interest
A fee you pay for borrowing money. For example, lender charge interest on loans.

Term
The period of time that covers the life of the lease (for example, 12 months, 24 months, etc).

Website editor - Rachael de Hek