Reference library
Finance jargon, translated into decisions.
Use the glossary when a proposal, lender conversation or calculator result introduces a term you want to understand. Each entry explains the practical question behind the wording.
Showing 30 of 30 terms. Definitions are general information; agreement wording and tax treatment can differ.
- APR Cost
- Annual Percentage Rate expresses the yearly cost of borrowing, including interest and certain fees, as a percentage.
- Asset refinance Structure
- A new agreement secured against an asset your business owns or is still paying for, intended to release equity or replace existing finance.
- Balloon payment Payments
- A larger final payment agreed at the start of an agreement. It can reduce regular instalments by deferring part of the capital.
- Broker People
- An intermediary who introduces a business to finance providers. A broker is not the lender and cannot guarantee an approval.
- Capital allowances Tax
- Tax relief that may let a business deduct some or all of the cost of qualifying assets from taxable profits.
- Chattel mortgage Structure
- A secured business loan where the asset is used as security while the business may own it from the outset, subject to the agreement.
- Commission People
- Payment a broker may receive from a finance provider if an agreement completes. It may be reflected in the rate or cost.
- Credit search Risk
- A lender check of business or personal credit information. A hard search can be recorded on a credit file.
- Deposit Payments
- An upfront contribution towards the asset price that reduces the amount financed.
- Documentation fee Cost
- A fee some providers charge to set up or complete an agreement.
- Equity Structure
- The difference between an asset's current value and what is still owed against it.
- Finance lease Structure
- A lease where the lender keeps legal ownership while the business uses the asset and pays rentals over an agreed primary period.
- Financial conduct authority (FCA) Regulation
- The UK regulator for financial markets and many financial services firms. Commercial finance can have different regulatory treatment from consumer credit.
- Hire purchase Structure
- A structure that spreads the asset price over instalments, with ownership normally transferring after the final payment and any option-to-purchase fee.
- Hard asset Asset
- A physical asset with a resale or recovery value, such as a van, excavator, tractor or machine tool.
- Independent valuation Asset
- An assessment of an asset's current market value, sometimes requested for used equipment or refinance.
- Option to purchase fee Cost
- A fee that may be payable at the end of hire purchase before ownership transfers.
- Personal guarantee Risk
- A promise by an individual to meet a business obligation if the business cannot.
- Primary period Payments
- The main rental period of a finance lease, during which the agreed rentals are paid.
- Refinance settlement Cost
- The amount needed to clear an existing finance agreement at a particular date.
- Residual value Asset
- An estimate of what an asset may be worth at the end of an agreement.
- Sale and leaseback Structure
- An arrangement where a lender buys an eligible asset from the business and leases it back, releasing a cash sum while use continues.
- Security Risk
- An asset or other support a lender can rely on if an agreement is not repaid. In asset finance this is often the financed asset.
- Soft asset Asset
- An asset with limited resale or recovery value, such as some software, training, branding or consumables.
- Soft credit search Risk
- A preliminary credit check that is not normally visible to other lenders in the same way as a hard search.
- Subject to status Risk
- A reminder that availability, pricing and terms depend on the applicant, asset, lender criteria and information verified.
- Term Payments
- The length of an agreement, usually expressed in months.
- Total repayable Cost
- The total of payments and applicable fees over the agreement, sometimes including a final balloon or option fee.
- VAT deferral Tax
- A structure that may postpone payment of VAT on a purchase for a limited period, subject to lender and business circumstances.
- Whole-of-life cost Cost
- The cost of owning or using an asset across the relevant period, including finance, maintenance, tax, downtime and end-of-term value.
Useful question: Compare the full proposal, not just the APR or monthly payment in isolation.
Useful question: The amount depends on valuation, existing debt, condition and the proposed structure.
Useful question: Plan how it will be paid: cash, refinance or sale. Interest is usually charged on the deferred amount.
Useful question: Ask who makes the lending decision, how the broker is paid and which providers may be considered.
Useful question: Rules depend on the asset and your business. Confirm treatment with an accountant.
Useful question: Availability and accounting treatment vary; it is not the same as every form of hire purchase.
Useful question: Read the commission disclosure and ask if a separate fee could apply.
Useful question: An enquiry through this site does not run a credit search. You should be told before a lender search happens.
Useful question: A larger deposit can reduce borrowing and payment size, but keep enough working capital for the business.
Useful question: Any fee should be shown in the proposal and included when comparing total cost.
Useful question: Equity is not automatically cash available; a lender will assess valuation, debt and affordability.
Useful question: End-of-term options and tax/accounting treatment should be explained for the specific agreement.
Useful question: Check the legal entity, regulatory status and whether the proposed agreement is regulated.
Useful question: Compare deposit, total payable, balloon, fees and VAT rather than only the monthly instalment.
Useful question: Asset quality and resale demand can influence what a lender will consider.
Useful question: The valuation may differ from the original invoice or the owner's expectation.
Useful question: Include it in the total cost comparison.
Useful question: Understand the amount, trigger and implications before signing. It is not automatic for every case.
Useful question: Read what happens after the primary period; the asset is not automatically yours.
Useful question: Ask for a current settlement figure before estimating how much equity could be released.
Useful question: Residual values are estimates and can affect payments, risk and end-of-term choices.
Useful question: Legal ownership moves to the lender and total cost should be compared with refinance or other funding.
Useful question: Understand what can be recovered, whether a guarantee is required and what happens after missed payments.
Useful question: Soft assets may need to be bundled with hardware or assessed through a different finance route.
Useful question: Ask what type of search is used and when any formal application will occur.
Useful question: Treat website illustrations as planning information, not an offer.
Useful question: A longer term can lower monthly payments but usually increases the total paid and may outlast the asset's useful life.
Useful question: Check whether a quoted total includes deposit, VAT, fees and any final payment.
Useful question: It is a cash-flow feature, not a removal of VAT. Confirm the treatment with your accountant.
Useful question: Monthly payment alone can hide the cost of a balloon, maintenance or replacement cycle.
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