Cancelling on a car lease

robbiegwa

Hi All,

I’m in a bit of an odd situation and I’m looking for some guidance. Sorry if this is the wrong forum but I can't see a car finance one.

I Bought an new Audi A4 on a 3 year lease from VW Finance 1 year ago. However, my wife and I have recently been recruited to work in Australia and the Money is too good to turn down. So the question is.

Can I sell the car back to VW Finance and then refinance the negative equity with them so that I don’t default or is there another option available?

Thanks,

Andrew

molerat

Need to know exactly what type of lease / finance it is. Many use the wrong terms when describing what they have signed up to.

robbiegwa

I have a 3 year PCP deal with a final lump sum payment.

System

I hope you have deep pockets. Depreciation in the first year is typically around a third of the value of a new car. Ebay shows ads for 2016 A4s with sub 10,000 miles for as little as £18,000.

How do you intend to get finance for the negative equity in the UK if you're moving to Australia? You would have a duty to declare to any finance company you are leaving the country.

molerat

You can't "sell back" what you don't own. 3 options

1) Early termination (not recommended). You hand the car back, they sell it at auction (for peanuts), deduct that from the settlement figure and their added charges and you pay the balance.
2) Voluntary termination. You need to pay half the total finance amount as stated on your agreement. Deduct what you have paid fom that figure to see how much it will cost you.
3)Sell the car. Get a settlement figure and see how much that is compared to the value of the car.

VW finance are unlikely to extend you unsecured finance so any shortfall needs to be found from somewhere else.

robbiegwa

So it looks to me that I need to go down the early termination route and then get a bank loan to cover the shortfall.

I wouldn't declare I'm moving to the bank as then I'd likely be refused credit as without getting the loan to cover the shortfall. VW would be owed for arguments sake 8k and I don't have that in cash. A loan is the only way for the company to be paid.

I've read elsewhere that I could default on the debt and as it's a civil matter I would be fine but that's not the sort of person I am. I pay my debts.

molerat

ET is usually the worst option as they sell the car for peanuts, well below its market value. You need to do the figures on the other 2.

jimbo747

Option 4 is set fire to it / push off a cliff / have a crash and claim off insurance, and then use the gap insurance you purchased (you did get gap insurance, right?) to cover the shortfall. If going abroad you'll lose your no claims after a few years anyway.

worried_jim

Option five- Are you going away for more than six years? If so, park at Heathrow and cancel the DD. Your credit gets trashed but you aren't here to suffer the effects.

System

robbiegwa wrote: »

I wouldn't declare I'm moving to the bank as then I'd likely be refused credit as without getting the loan to cover the shortfall.

That would be fraudulent to make an application knowing you're leaving the country without declaring it as in proper go to prison fraud.

I've read elsewhere that I could default on the debt and as it's a civil matter I would be fine but that's not the sort of person I am.

"Not that sort of person" but happy to commit fraud? :huh:

System

jimbo747 wrote: »

Option 4 is set fire to it / push off a cliff / have a crash and claim off insurance, and then use the gap insurance you purchased (you did get gap insurance, right?) to cover the shortfall. If going abroad you'll lose your no claims after a few years anyway.

Because that doesn't look at all dodgy when you move to Oz within a month.