Lease car - 40% remaining payable if total loss

[Deleted User]

Just reading the contract for lease car I'm getting.

Seems to be saying that, in the event of a total loss, even if the leasing company get the value of the car from the insurance company then 40% of remaining payments are still payable.

Just checking - if I write it off in the first week thats £3000 or so payable!!!

Is that normal? Bit unfair that leaser would expect this - after all insurance has replaced their car.

Assuming my insurance wouldnt cover my loss here? Is there anything that would cover this?

[Deleted User]

Think I need GAP insurance to cover this I guess?

k3lvc

It'd be interesting for you to post up the wording of the agreement to see if your interpretation is correct. On my only lease car I could exit at any time in the agreement by paying 40% of the outstanding rentals but that was nothing to do with writing off the vehicle.


I covered any potential losses buy RTI Gap insurance - maybe overkill but it was a rare £35k car that could potentially have been written off for relatively little damage and iirc cost me c.£250 for 3yrs cover

bigjl

I would always have GAP cover if buying or leasing a new car.

AdrianC

Another vote for "post the wording". This sounds utterly unbelievable.

The car gets written off, the insurer covers the value (whether normal policy or gap), the lease co still want 40% of remaining payments? If that's for real, and not a mis-reading, then this is a lease company to avoid with several other people's bargepoles.

[Deleted User]

See (C) and (D) below.

Consequences of termination
18.1 On the termination of the agreement for any reason:
(a) the hiring of the Vehicle shall cease and the Vehicle shall no longer be in the possession of the Hirer with the consent of the Lessor;
(b) the Hirer shall (except in the event of a total loss) return the Vehicle in accordance with the provisions of clause 19;
(c) the Hirer shall pay to the Lessor the aggregate of:-
(i) all rentals and other payments due or in arrears on the date of termination together with all interest due in accordance with clause 16, and
(ii) any excess mileage charge calculated in accordance with the provisions of
clause 5;
(iii)
(A) where the agreement has been terminated for a reason other than a total loss of the Vehicle and the Vehicle is returned to the Lessor or is capable of being and is repossessed by the Lessor in accordance with this agreement, an amount equal to 40% of the aggregate of all the rentals which would have continued to be or to become payable by the Hirer to the Lessor until the expiry in due course of the contract period if the agreement had not been terminated it being agreed by the Lessor and the Hirer that such an amount is a reasonable pre-estimate of the loss that the Lessor will suffer as a result of the early termination of the hiring of the Vehicle taking into account the Lessor's loss of the future rentals and setting against such loss the benefit that the Lessor will gain as a result of (1) the accelerated payment, and (2) the excess of the value of the Vehicle on its being returned to the Lessor prior to the expiry of the contract period (and assuming the Vehicle to have been operated and maintained in accordance with the provisions of the agreement) over the value which the Lessor has
ascribed to the Vehicle for accounting purposes in consequence of the Vehicle being hired to the Hirer pursuant to the agreement; or

(B) where the agreement has been terminated for a reason other than a total loss of the Vehicle and for whatever reason the Vehicle is not returned to the Lessor or repossessed by the Lessor in accordance with this agreement, an amount equal to 100% of the aggregate of all the rentals which would have continued to be or to become payable by the Hirer to the Lessor until the expiry in due course of the contract period if the agreement had not
been terminated, discounted at the rate of 3% per annum it being agreed by the Lessor and the Hirer that such discounted rate is a reasonable preestimate of the gain to the Lessor of the accelerated payment; or

(C) where the agreement has been terminated in the event that the Vehicle is a total loss, and the Lessor receives the value of the Vehicle from the insurer of the Vehicle (in accordance with clause 6.4), an amount equal to 40% of the aggregate of all the rentals which would have continued to be or to become payable by the Hirer to the Lessor until the expiry in due course of the contract period if the agreement had not been terminated it being agreed by the Lessor and the Hirer that such an amount is a reasonable pre-estimate of the loss that the Lessor will suffer as a result of
the early termination of the hiring of the Vehicle taking into account the Lessor's loss of the future rentals and setting against such loss the benefit that the Lessor will gain as a result of (1) the accelerated payment, and (2) the excess of the value of the Vehicle paid to the Lessor by the insurer of the Vehicle (in accordance with clause 6.4) prior to the expiry of the
contract period over the value which the Lessor has ascribed to the Vehicle for accounting purposes in consequence of the Vehicle being hired to theHirer pursuant to the Agreement.

(D) where the agreement has been terminated in the event that the Vehicle is a total loss and for whatever reason the Lessor DOES NOT receive the value of the Vehicle from the insurer of the Vehicle (in accordance with clause 6.4), an amount equal to 100% of the aggregate of all the rentals which would have continued to be or to become payable by the Hirer to the Lessor until the expiry in due course of the contract period if the agreement had not been terminated, discounted at the rate of 3% per annum it being
agreed by the Lessor and the Hirer that such discounted rate is a
reasonable pre-estimate of the gain to the Lessor of the accelerated payment;

[Deleted User]

AdrianC wrote: »

Another vote for "post the wording". This sounds utterly unbelievable.

The car gets written off, the insurer covers the value (whether normal policy or gap), the lease co still want 40% of remaining payments? If that's for real, and not a mis-reading, then this is a lease company to avoid with several other people's bargepoles.

Yes seems a bit unfair. See wording in previous post.

Lease company is Fiat Leasing so I'd hope it would be above board. I've spoken to dealer and they have explained that it IS covered and, in the event of a total loss, they would just accept the insurance payment but then would not expect the 40% payments. Would rather see this in black and white though.....

[Deleted User]

k3lvc wrote: »

It'd be interesting for you to post up the wording of the agreement to see if your interpretation is correct. On my only lease car I could exit at any time in the agreement by paying 40% of the outstanding rentals but that was nothing to do with writing off the vehicle.


I covered any potential losses buy RTI Gap insurance - maybe overkill but it was a rare £35k car that could potentially have been written off for relatively little damage and iirc cost me c.£250 for 3yrs cover

I can understand if you to choose to terminate. You've signed up so expect penalties if your terminate early.

But I've worked out - if car gets stolen in 1st week then 40% is £3360!

I'd have no problem being tied in for the rest of the three years with a replacement supplied car though but, for company to get their car paid for and then get free rentals seems unfair.

Then again, are there unscrupulous people out there. Want to terminate lease agreement but its 40% if you terminate voluntarily. If you get the car written off/stolen there is nothing more to pay.

Worth an insurance claim to get you out of a lease contract you can't afford any more? Never surprises me how crooked some people can be...

[Deleted User]

Although looking at clauses (C) again it seems to imply the payments would be 40% but you'd also need to consider the fact that the the lessor is getting more back from the insurance than they would if the car was returned normally after 3 years. So maybe its not an issue.

i.e. Lessor couldnt demand 40% of remaining payments straight away, plus get the full value from the insurance company. This would put them in a better position I suppose than getting a 3 year old car back and getting lease payments for 3 years.

Seems GAP insurance is about £70. Might be worth getting anyway to save any arguments if it should ever happen.

k3lvc

[quote=[Deleted User];70575071]I can understand if you to choose to terminate. You've signed up so expect penalties if your terminate early.

But I've worked out - if car gets stolen in 1st week then 40% is £3360!

I'd have no problem being tied in for the rest of the three years with a replacement supplied car though but, for company to get their car paid for and then get free rentals seems unfair.

Then again, are there unscrupulous people out there. Want to terminate lease agreement but its 40% if you terminate voluntarily. If you get the car written off/stolen there is nothing more to pay.

Worth an insurance claim to get you out of a lease contract you can't afford any more? Never surprises me how crooked some people can be...[/QUOTE]


Mine was through Fiat as well (OK Alfa Romeo but funded via Fiat Auto Contracts)


Return to Invoice GAP (rather than just shortfall GAP) was the advised way to go with mine (albeit some years ago so I don't still have the contact to check wording)


I exited the contact 3 months early (and paid the 40% of 3m rentals) which avoided the need to spend more than that on an MOT, new brakes and 4 new tyres before handing back. Were it not for my morals (and the fact that the GAP insurance companies must scrutinise all claims in last few months of policy) it would have been tempting to 'lose' the car and walk away with £25k+ after paying FAC the book value of the car

Ectophile

The lease company will expect a big fat profit on the lease deal, taking account of the depreciation of the car over the duration of the lease.

If the car is written off the day after it's delivered, they will get back the value of the car, but they won't get all the profit they were expecting to get.

That will be why they have added a big penalty clause - to recover the profit margin they were expecting.