Paying off Car Lease Early

Mr_Munneepennee

I'm 10 months into a 36 month PCH car lease woth VW financial services. I want to simply pay off the outstanding balance in a lump sum and keep the car for the 3 years. I want to do this in order to get a bigger mortgage as my car hire payments are really hurting me in terms of what i can get offered mortgage wise.

Does anyone have any experience of this? Can I do this or not?

Any help is much appreciated.

jonesMUFCforever

What does your lease agreement say?

Mr_Munneepennee

Doesn't mention it. Only talks about early termination.

antrobus

it's a PCH deal - Personal Contract Hire. There is no option to buy. If you want to buy the car you'll have to ask VW FS.

parking_question_chap

antrobus wrote: »

it's a PCH deal - Personal Contract Hire. There is no option to buy. If you want to buy the car you'll have to ask VW FS.

Thats not what they are proposing.

The plan is to settle the total lease price now, then return the car at the end.

Mr_Munneepennee

Correct. Thanks for explaining

fiisch

You'll need to talk to finance provider, as it varies.


I did the same with a PCP deal (Honda) and I was allowed to pay the finance down, but had to leave a monthly balance outstanding! (So I pay £20 a month instead of £500 a month). However, this was enough to get the lender to agree....

Gentoo365

The lender may consider that this arrangement (prepaying for the car) will only cover you for a few years, after that you still need some money for 'transport costs' so they may want to include the payments anyway as they are still 'expenditure'.

The credit will still show up as you 'owe' the final payment. Your plan will be to pay this off by returning the car, but then the question will be how you replace it? what will be your new transport expenditure?

If it's a affordability formula issue. i.e. you believe that your true disposable income is higher as your savings cover some of the car costs then it is possible an underwriter may be willing to review your application.

However as I said, being able to artificially reduce your outgoings for a while (via prepayment) does not really help as a mortgage is a long term commitment.