Buying a New Car - Glossary
You’re sure to encounter plenty of jargon when you are attempting to buy a new car. Failing to understand these terms could mean that you sign for something you don’t really want, which in turn could bump up your payments. So make sure you know the key terms by reading this glossary.
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Finance Terms
APR
The Annual Percentage Rate that you will pay on a new car loan, effectively this is the cost of taking out the credit to pay for the car. A number of factors can effect the APR including your credit rating, the Internet Rate, the company supplying the credit, and the credit product used to obtain the car.
Down-Payment
This is the money you pay initially to reduce the amount you have to pay interest on, therefore cutting your monthly payments.
Depreciation
How rapidly a car loses its value. Most cars will lose at least 50% of their original value after three years.
PCH
Stands for ‘Personal Contract Hire’. It is a car leasing contract for private individuals, rather than businesses.
PCP
Personal contract purchase is effectively the same as car leasing but gives you the option to buy the car at the end of the leasing period.
PLP
A personal leasing plan in which you pay the car finance company monthly instalments based on the value of the vehicle when you start your contract and its worth at the end of the contract period, after depreciation. Residual value – How much the car is worth at the end of the leasing period, i.e. once depreciation is considered.
Car Jargon
ABS
Anti-lock braking system, which prevents the wheels from locking in an emergency braking situation. Almost all new cars come with ABS as standard.
BHP
Brake horse power. Used to indicate the amount of power an engine can produce at a certain speed.
Clocking
When the mileage is adjusted to increase the value of the vehicle. This can be difficult to spot when you buy a new car, but be sure to look out for it.
Cruise Control
A system that allows you to set the speed that you wish to maintain.
DVLA
The Driver and Vehicle Licensing Agency where you must record all changes of vehicle ownership in the UK.
Euro NCAP
Standing for the European New Car Assessment Programme which tests the safety of each model of vehicle - the higher the rating, the safer the car with five stars being the maximum score.
ESP
Electronic stability programme. A system that analyses cornering stability to correct over steer and under steer.
ESR
Meaning electric sunroof – operated with a simple push of a button instead of with a winding mechanism.
FSH
Full service history - this is the complete service record of the car you are buying but obviously this is less relevant with new cars. However be aware to ensure your car has a FSH to retain its maximum value.
GPS
Meaning global positioning satellite, this is used to help you navigate your journey.
Grey Import
Cars are often sold cheaper in mainland Europe than they are in the UK. As a result it is not uncommon for dealers to ship vehicles in from other countries without the permission of the manufacturer – these are known as ‘grey imports’.
ICE
Standing for ‘in car entertainment’ this refers to aspects such as CD players, DVD players, etc.
Kit Car
Refers to a vehicle that has been put together privately from a collection of parts.
Lemon
A car with a poor service history that might even be dangerous to drive, sometimes also known as a ‘Friday Afternoon Car’.
MOT
An annual test for all cars aged three years and over. All cars in the UK must pass to prove they are roadworthy - driving a vehicle that hasn’t passed this test is illegal. A valid MOT is required when renewing Vehicle Excise Duty.
PAS
Power assisted steering – almost all new cars now come with power assisted steering.
Ringer
A car that has been stolen or had its identity changed.
Sat Nav
An abbreviated version of ‘satellite navigation’ – a system used to help you navigate your journey.
T&T
This stands for tax and MOT and means that the car has passed the Department of Transport’s MOT test and has road tax.
V5
Make sure that any car you buy comes with a V5 – this is its logbook used for registration purposes and is issued by the DVLA.
VED
Stands for Vehicle Excise Duty which is a road tax levied on all road vehicles. Grades are linked to the car’s CO2 emissions, the higher the CO2 the higher the VED.
VIN
Vehicle Identification Number, a 17 digit number that should be found on the metal plate in the engine bay of a car. This is unique to every car and contains information on when and where it was built. This number should always be found in the ‘V5’.
Write-Off
Commonly used to refer to a vehicle that has been damaged or stolen. If you are involved in an accident your insurance company could choose to pay an agreed value rather than pay for repairs to the vehicle because the damage is too extensive.
Fuel Economy And The Green Options
Auto Stop-Start
A system that switches off the engine when the car is stationery as soon as you take the car out of gear and foot off the clutch. The car will then automatically restart when the clutch is pressed. This saves fuel and reduces CO2 emissions when idling in traffic.
CO2 Emissions
The fuel economy of your next vehicle and its CO2 emission rating are closely tied. The greater the MPG figure, the lower the CO2 tends to be.
Direct Injection
An engine that converts fuel into energy efficiently. It does this because the injectors are positioned within the combustion chamber, the most efficient location for pollution reduction and power generation.
Hybrid Cars
A hybrid car uses an ordinary combustion engine combined with an electric motor and battery storage system to boost the fuel efficiency of the car and reduce carbon dioxide emissions.
LPG
An abbreviation for liquid petroleum gas. It is purer than petrol and reduces CO2 emissions by around 10 per cent. It had a spurt of popularity in the UK when the Government issued grants for LPG conversions however, these have been withdrawn.
MPG
Stands for Miles Per Gallon and gives an indication on the fuel efficiency of the car. The higher the MPG the better fuel economy the car has, and the more miles it will travel between refuelling. Published MPG figures are obtained by the manufacturer under perfect driving conditions, not real life driving. Do not expect to hit this published figure.
ZEV
Refers to a zero emissions vehicle, such as an electric car, which does not produce any harmful emissions that could negatively impact the environment.
In the final section we’ll examine some of your frequently asked questions.