Terminology Explained

Please see below a short list of motor related terms, which you may come across when speaking with a car dealer or researching finance online.

This is the length of time over which you agree to repay the amount you have borrowed from V12 Vehicle Finance.

The APR shows the annual cost of a finance agreement over and above the amount you have borrowed. The APR will include interest rate charges and any other fees included in the agreement, such as administrative fees. By law, the APR must be shown on relevant documentation presented to you. You can use the APR to compare the cost of different finance products.

If you have chosen Personal Contract Purchase (PCP) as your preferred finance option, you will be asked to select the annual mileage on your contract that best suits your anticipated requirements. This enables V12 Vehicle Finance to calculate the value of the car at the end of the agreement (also referred to as the Guaranteed Future Value). It is important to be realistic with your annual mileage estimation as excess mileage charges could apply if you choose to return the vehicle at the end of your agreement and your vehicle has exceeded the contracted annual mileage.

A credit agreement is a legally-binding contract between you, the customer and V12 Vehicle Finance, the finance company. The credit agreement must include details of the loan amount, the term, rate of interest, other charges and your rights and responsibilities for the duration of the agreement. You will receive a copy of the agreement you have entered into.

A credit applied to your loan account will reduce the balance you owe. An example of a credit to the account would be when you make your monthly payments to your loan.

A debit applied to your loan account will increase the balance you owe.  An example of a debit to your account would be if a direct debit did not clear or if fees/charges were applied to your account.

This is when you the customer pays off a finance agreement before the agreed term is completed. You can obtain your settlement figure by logging into My Account. Alternatively you can contact us on 0330 303 0568.

This is the last repayment to be made under your V12 Vehicle Finance agreement, and can include an option to purchase fee under a hire purchase agreement or the Guaranteed Future Value payment for a Personal Contract Purchase agreement.

This means the interest rate is fixed throughout the duration of the agreement.

This is where a percentage of the total cost of the car is deferred until the end of the contract. The forecast value of the car is provided by V12 Vehicle Finance at the beginning of your agreement. This is also referred to as the Final Balloon payment.

Hire purchase or HP is a motor finance product offered by V12 Vehicle Finance. When taking out a HP agreement, you choose to pay an optional initial deposit, then fixed monthly repayments over a set number of months. With HP the ownership of the vehicle is not officially transferred to you, the customer until all payments have been made (including the £10 option to purchase fee).

An interest rebate is when a refund of some or all of the interest charged to your finance agreement is applied to your account. An example of when you could receive an interest rebate is when you make a lump sum payment as a partial or full settlement of your finance agreement.

A payment at the end of your V12 Vehicle Finance Hire Purchase agreement which, when paid, transfers ownership of the car from V12 Vehicle Finance to you, the customer.

Part-exchange involves trading in your existing car and using its excess value above any outstanding finance as part payment towards your new car, perhaps to help fund a deposit under a finance agreement.

Personal Contract Purchase (or PCP, for short) is a form of hire purchase agreement. It is a flexible finance product designed to help you purchase a car for a fixed period of time normally between 2 and 4 years. Because a proportion of the total vehicle cost is deferred to the end of the term, PCP can provide lower monthly payments when compared to standard Hire Purchase (HP) over the same term. At the end of your finance agreement, you have three options:

Option 1
Part Exchange – If the value of your vehicle exceeds the Guaranteed Future Value (GFV) amount, you can use the difference as a deposit towards another car. Your supplying dealer can help you with the valuation of your car.

Option 2
Buy – Simply pay the Guaranteed Future Value (GFV) amount to own the car.

Option 3
Return – Agree a handover date and return the car to us. Please note that additional charges may apply if you have exceeded the agreed contracted mileage or if there is damage to the vehicle that exceeds our wear and tear condition.

A quotation provides an indication of the costs that would apply if you went ahead with a finance agreement with V12 Vehicle Finance. The information shown in the quotation is prescribed by law and must include any deposit required, the monthly repayments, any Guaranteed Future Value payment, the Annual Percentage Rate (APR), other charges and the total amount payable. Asking for a quotation does not commit you to entering into an agreement at a later date, and will not leave a ‘footprint’ on your credit record.

The right of withdrawal under the Consumer Credit Act (CCA) applies only to the credit agreement – it is not intended to end any linked contract for the supply of goods or services that the credit is paying for, such as a vehicle.

By withdrawing from your V12 Vehicle Finance credit agreement you are redrawing from the finance agreement, not the purchase of the vehicle. You will still be required to pay for the vehicle some other way, unless that linked contract has a separate right of withdrawal or cancellation, so you must find a source of alternative funding. Once you’ve paid for the vehicle in full, (plus interest) title to the vehicle passes to you, the customer from V12 Vehicle Finance.

Voluntary Termination

You have the right to end your Agreement early and return the car to us. This is known as Voluntary Termination.

You must pay or have paid at least half of the total amount payable under your Agreement.

You will also need to pay for any damages to the vehicle outside of reasonable wear and tear.

If you have not already paid half of the total amount payable, or there are arrears due, you will remain liable for this amount after you return the vehicle to us.

If you have already paid half of the total amount payable, any arrears will still be due.

You will also be liable for any additional charges.

This option is not available if the agreement has already been terminated.


Refer to our Motor Finance Vehicle Options for a table that compares the options in more detail, here.

You can also contact our Collections Department on 0330 303 0567.

Voluntary Surrender

Voluntary Surrender means you agree to hand the vehicle back to us.

We will arrange to collect and sell the vehicle at auction.             

The net proceeds of the sale will be deducted from your outstanding balance, along with any interest rebate due.

This option is available if the agreement has already been terminated.

You will be liable for the outstanding balance and any additional charges.


Refer to our Motor Finance Vehicle Options for a table that compares the options in more detail, here.

You can also contact our Collections Department on 0330 303 0567.