First car buying jargon: What do these terms mean? | AA Cars

If you’re looking to buy your first car, cutting through all the jargon and stats can be a challenge. 

Manufacturers and dealers use no end of specialist terms and acronyms to advertise their cars – and it can feel like a whole new language. 

If you’re finding the jargon confusing, you’re not alone. Here’s our handy guide on all the terms you need to know.

APR – Annual percentage rate

You’ll hear a lot about APR if you’re looking to finance a car. It’s a way of measuring the amount of interest you’ll have to pay if you borrow money. The lower the APR rate, the better the deal is. If you have 0% APR, it means you won’t have to pay any interest – so you’ll end up paying the same amount as if you’d bought the car with cash.

BHP – Brake horsepower 

This is a standardised way of measuring a car’s power. You may also see it referred to as HP, PS and KW, which is a slightly different way of measuring it. The higher the number, the more power it has. But with a first car, a lower BHP – ideally sub-100bhp – might be best, as these are cheaper to insure as they’re deemed as being more manageable for a first driver. 

CAT N/S – Category N/S

You might see a car referred to as ‘CAT N’ or ‘CAT S’ in an advert. This means that it’s been involved in an incident or crash, and an insurance company thinks the cost of repairs will be more expensive than replacing the car. Essentially, the car has been written off.

However, CAT N and CAT S cars can be repaired and used on the road again, though they don’t need any inspection. While often much cheaper – and therefore tempting – it’s best to avoid these cars. 

CO2 emissions

When a petrol or diesel car burns fuel, CO2 emissions (or carbon dioxide) are produced out of the tailpipes. As well as CO2 emissions showing that cars that are cleaner (the lower the number the better), these also decide annual car tax rates, too. It’s only electric cars that emit no CO2 emissions. 

FSH/PSH – Full service history/Part service history 

A frequent term you’ll see in adverts is ‘FSH’ and ‘PSH’. This describes the kind of service history a car has – models with FSH being better-maintained and usually more valuable. Always ask to see a car’s service history as sometimes a ‘full service history’ might not be as extensive as it sounds. 

HP – Hire purchase 

This is another way of financing a new or used car. With Hire Purchase, you’ll own the car at the end of the finance agreement, and won’t have to pay any additional fees for the vehicle. You’ll pay a deposit and set monthly payments. However, you won’t own the car until the last payment has been made. 

Insurance group

You might see a car being advertised as having a ‘lower insurance group’, and this is certainly appealing if you’re looking for a first car. All cars have an insurance group, which range between 1 and 50. The lower the number, the cheaper it should be to insure.  

MPG – Miles per gallon

If you’re looking for something that’s cheap to run, you should look out for ‘mpg’ – or miles per gallon – figures. The higher the number, the cheaper it will be to run, and you’ll make fewer trips to the petrol station.  

Optional final payment 

If you take out a PCP agreement (explained below), you can decide whether to keep or sell the car once your agreement ends.

If you decide you want to own the car, you pay the optional final payment. This amount varies depending on the expense of the car, but it’s usually several thousand pounds. 

PCH – Personal Contract Hire 

This is another type of finance, and one that’s popular if you have no intention of owning the car at the end. You pay an initial deposit followed by set monthly payments, which are usually cheaper than other options – essentially as you have nothing to show for it at the end of the contract. PCH is usually only available on brand new cars.  

PCP – Personal Contract Purchase

The UK’s most popular type of financing a car is PCP. Again, you pay a deposit followed by monthly payments, usually for between 2 and 5 years.. It offers more flexibility than other types of finance, as at the end of contract you can either:

  • return the car
  • pay the resale value and keep it
  • Use the resale value towards buying a new car (this usually has to be with the same dealer or manufacturer that you bought from originally) 

VGC – Very good condition 

Another term you might see in a car advert, VGC simply means very good condition. You’ll also see cars advertised as being in a ‘good’, ‘superb’ and ‘immaculate’ condition. Take the words with a pinch of salt. A car that might be immaculate to one person could be in poor condition to another. You should always view a car in person to check these claims, or pay for an inspection (link) to verify this. 

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