Mercedes Benz Lease early settlement due to low mileage, no salary

rebecca1

I took a 3 year lease contract out September 2018, down payment of £7,000 and I just hand the car back at the end of 3 years and walk away. 
The MPA was 15,0000, my car has only done 29,000 miles to date as it sits on drive 95% of the time because of lockdown.  
Not wanting to hand the car back to Mercedes with drastically less mileage ( no where near 45,000 miles  I wrote to MB Finance and asked if they could reduce my monthly payments for getting the car back under mileage. They said they cannot change the lease terms now and that Covid 19 had devalued cars.  They did not want to speak to me any further so I went back to the Manager at the dealership. Who said.... 

The option to voluntarily terminate your finance contact will be viable, once you have made three further payments. (£370.00 x 3) 

Once the payments have been made I would be  over the 50% total amount payable threshold, and I can pay to reach the 50% if preferred.   

The settlement figure was £20907.37... 

I had a look online to value the car and I'm seeing similar cars being sold through Dealers around £20,000   

I am a little bit miffed that Mercedes at not being able to give me a better/more options. 

If my car has done only 30,000 instead of 45,000 when I hand it back surely that would make the car worth more? It seems everything works out better for them! 

If I did manage to sell the call privately and pay off the lease, can I get part of the £450.00 car tax refunded? Anyone know?   

I'm just wondering what to do now as I have not been able to get paid for a year... anyone have any ideas?

Thanks for your help... 

Rebecca 

DrEskimo

It's a finance agreement, not a lease. There's a very important distinction.

You say other cars from dealers are around £20k, but have you asked for a trade in valuation? How similar are these cars in terms of trim, options, and mileage/age?

If the shortfall between the trade in value and your settlement is greater than £1,110 then your best option is voluntary termination. Might as well keep the car for a few months rather than pay it all early though. Makes no difference to what you pay.

Grumpy_chap

What is the balloon payment at the end of the term, assuming you went full-term? 
Is that the "settlement figure" you stated (£20,900), or is the "settlement figure" today?

ontheroad1970

Two things:  Just because a dealer has a car priced at 20k doesn't mean they will get 20k for it.  Secondly,  that is a retail price and is not the actual value of a car for purchase by a dealership.  That car is most likely valued at least 10% lower than that at cost price.  So before getting into a discussion with the finance company about remaining value you need to compare apples with apples, not pears.

missile

Sensible to keep it for next three months then hand it back.
29,000 miles on a car less than three years old is not low mileage.
Do you no longer require or do you have another car?

rebecca1

What is the balloon payment at the end of the term, assuming you went full-term? 
There was not a balloon payment due 
Is that the "settlement figure" you stated (£20,900), or is the "settlement figure" today?
That settlement figure is valid till 18th Feb 21
Do you no longer require or do you have another car?
I just don't see the point in stretching to pay for the car to sit on the drive, I have the opportunity of use of another car when I can use one!  

Grumpy_chap

Hello Rebecca,
I am still unclear as to what finance product you have, as there are terms that seem to be mixed up between different types of finance.  This is important as knowing the finance product you have is critical if people are to offer good advice.

1. Is this a business or personal contract?
2. Is it truly a lease?  If so, monthlies of £370 would normally mean a deposit of £1k - £2.5k (not £7k)
3. If it is truly a lease, then reference to VT is likely incorrect.
4. Is it a PCP, like a form of lease for personal customers?  That would match the reference to VT and the higher deposit.  However, there would also be a balloon payment.
5. A lease would not have a "settlement figure" of £21k
6. You mention "If I did manage to sell the call privately and pay off the lease".  If it is a lease, that is not an option.  If it is PCP, then that may be an option and, depending on the size of the balloon payment, may be the best option.
7. If it is a PCP, I'd expect a balloon payment around £16k trying to fill in the gaps of your figires.
8. I suspect not a conventional HP / loan as you would then have paid far more and nearly own the car by now, so the "settlement figure" of £21k is too high.

Can you go back to the original finance paperwork and confirm the details and type of the finance agreement?  This will allow suggestions to be considered or ruled out.

rebecca1

Grumpy Chap: 
I have just checked paperwork and it states: Regulated Contract Purchase. 
Before I signed the contract, I told the dealership that I had no intention of keeping the car after 3 years. 
They said that I could hand he car back and if the condition and mileage are OK there would be no further payment. 
Hopefully this info helps... Car Tax was £465.00 per annum 
Rebecca  

AdrianC

Sounds like it's a PCP rather than a lease.

https://www.mercedes-benz.co.uk/passengercars/being-an-owner/existing-finance-customers/frequently-asked-questions/know-your-rights.html

You have every right under it to hand the car back at the end, so it fits your "no intention to keep". The main difference with a lease is that this gives you the option to buy it...

Settlement, at that figure, sounds like it includes you buying it.
£7k down, £370 x 36 = £20,320 through the term.
Sept 2018 to now is 29 mo, so you've paid £17,730 so far.
The 50% includes the balloon. If 3 x £370 get you from here to 50%, then that's about £19k paid, £19k remaining - which would all sit about right with you paying ~£21k now... and getting the keys. This is what'd happen if you wrote the car off or it was nicked.

Or pay the 3 x £370 and hand the car back.

That VED figure says it was a £40k+ list-price new car. And now it's a £20k used car. Somebody's got to pay for that depreciation.

No, you have no right to change the contract to reduce the mileage. If you think the car's going to be worth more than the balloon at the end, buy it and sell it, rather than handing it back. If you were over the mileage, then there's a per mile overage charge within the contract.

Grumpy_chap

rebecca1 said:

Grumpy Chap: 
I have just checked paperwork and it states: Regulated Contract Purchase. 
Before I signed the contract, I told the dealership that I had no intention of keeping the car after 3 years. 
They said that I could hand he car back and if the condition and mileage are OK there would be no further payment. 
Hopefully this info helps... Car Tax was £465.00 per annum 
Rebecca  

Definitely sounds like a PCP.
What is the balloon payment?

neilmcl

Grumpy_chap said:

rebecca1 said:

Grumpy Chap: 
I have just checked paperwork and it states: Regulated Contract Purchase. 
Before I signed the contract, I told the dealership that I had no intention of keeping the car after 3 years. 
They said that I could hand he car back and if the condition and mileage are OK there would be no further payment. 
Hopefully this info helps... Car Tax was £465.00 per annum 
Rebecca  

Definitely sounds like a PCP.
What is the balloon payment?

@rebecca1 It'll possibly be referred to as the "Optional Final Payment".