Car leasing ending soon - Low mileage due to COVID

msubbu

Hi, my 3 year deal is to expire soon and I am left with more than a years worth of mileage (18k annual mileage) in the car. Spoke with finance and they said nothing can be done, so raised a complaint and asked for the Ombudsman. They have come back yesterday with an extension offer of 12 months, monthly payment reduced from 300 to 250 quid and I need to sign up by tomorrow. Looking for advice here on if this is a good deal? I am tempted to sign up as there is a paucity of new cars but wanted to see if anyone here thinks there are better options. Not signing up would mean giving up 18k mileage that I have in theory already paid for. Any advice appreciated.

Edit: There is no buyback option available here

[Deleted User]

ignore this, missed the bit about leasing in the title

TadleyBaggie

Deleted_User said:

If you want to sell it and clear the finance you might actually be left with cash. 

If it truly is a lease (and not actually a PCP), then selling it is not an option.

msubbu

Deleted_User said:

You haven't "paid" for the extra mileage, the GMV is based on the assumption you will do that many miles and is priced accordingly. If anything, it means your car value will be higher than the GMV due to lower mileage - have you put the reg into WBAC and similar and see what it comes out as? If you want to sell it and clear the finance you might actually be left with cash. Alternatively, keep it for another year

No-one here can say if it's a good deal as we don't know what the car value is, what you have paid so far, if you want to keep the car etc

I am on one of those lease deals where I do need to hand the car back and dont have buy back as an option. This is what I meant by saying I have paid for it  :-) I priced the monthly payments based on 18k rather than 10k  and paid the premium. If anything, the fin company will benefit from the low mileage on return. Good advice on checking the car value, will do that to see how much the fin company will benefit

DrEskimo

That's the risk you take with leasing.

You opted to take it on a monthly payment based on a set mileage, knowing that if you went over you were likely facing punitive extra mileage charges. There is nothing in the contract of a lease about going under the mileage limit and being refunded. That is at the discretion of the leasing company.

The reduction of £50 per month doesn't sound overly appealing, but you may have limited options due to the high cost of used cars and low availability of new cars. 

This is precisely why I buy used cars. Overall ends up much cheaper, and I don't have to worry about being bound by punitive contracts about exactly how long and how much I can drive my car. 

[Deleted User]

TadleyBaggie said:

Deleted_User said:

If you want to sell it and clear the finance you might actually be left with cash. 

If it truly is a lease (and not actually a PCP), then selling it is not an option.

Ah yes I missed the leasing bit in the title, my bad

FreeFallerSaver

As @DrEskimo says, that's the risk unfortunately.

My current 24 month lease is due to expire in September. Like many folk - yourself included - my mileage plumetted during the pandemic. Despite my 8K pa contract, a year into the lease I'd done less than 4K. Yes, I'd 'paid for' 8K pa but that's just the way it goes. However, I reworked my contract with the finance company last September (it was Lex) which took me five minutes through their portal, after which I'd reduced my mileage to 5K for the second year, which in turn reduced my monthly payment by £40. Admitedly, not all finance companies will do it.

I will likely have to extend as well come September, due to the complete unavailbility of anything that remotely appeals to me. Not happy as I really hate what I currently have, but let's face it it's a first world problem. In your case, the finance company's offer may not seem that brilliant, but you should probably look at in the context of the current leasing market and lack of vehicle availability. Initial payments are crazy high on many deals at the moment. I don't know your circumstances but maybe you should just cut your losses (so to speak) and take the offer of an extension until things settle a bit more, at least you won't be forking out a large initial for a while longer.

Not sure there's much benefit researching what the car's value currently is, as you suggest above, but who knows maybe you could use it as a cheeky bartering tool to get them to reduce that revised monthly payment. No harm in trying.

Sandtree

msubbu said:

Hi, my 3 year deal is to expire soon and I am left with more than a years worth of mileage (18k annual mileage) in the car. Spoke with finance and they said nothing can be done, so raised a complaint and asked for the Ombudsman. They have come back yesterday with an extension offer of 12 months, monthly payment reduced from 300 to 250 quid and I need to sign up by tomorrow. Looking for advice here on if this is a good deal? I am tempted to sign up as there is a paucity of new cars but wanted to see if anyone here thinks there are better options. Not signing up would mean giving up 18k mileage that I have in theory already paid for. Any advice appreciated.

Edit: There is no buyback option available here

Why do you think they should do anything? If the situation had been different and the residual value of the car had plummeted would you have considered retrospectively paying an extra £50 a month to cover it?

Leasing gives you a fixed cost of motoring, you have a certain amount of risk around the mileage and the lease company has a risk around what value the car will have when the lease ends. 

As to the deal? That's up to you and your plans really...  I suspect that had you taken a 4 year deal rather than 3 year from the outset that the total cost would be cheaper than the total that you'll pay on this 3+1 deal 

Grumpy_chap

FreeFallerSaver said:

 In your case, the finance company's offer may not seem that brilliant, but you should probably look at in the context of the current leasing market and lack of vehicle availability. 

It may well be only the lack of vehicle availability that means the lease company is agreeable to any extension deal at all.  If the lease company takes the OP's car back and can't supply a new vehicle, the lease company generates zero income.  This extension is probably mutually beneficial.  Only the OP can establish whether there is any scope to negotiate the cost of the monthly for the additional year.

FreeFallerSaver

Grumpy_chap said:

FreeFallerSaver said:

 In your case, the finance company's offer may not seem that brilliant, but you should probably look at in the context of the current leasing market and lack of vehicle availability. 

It may well be only the lack of vehicle availability that means the lease company is agreeable to any extension deal at all.  If the lease company takes the OP's car back and can't supply a new vehicle, the lease company generates zero income.  This extension is probably mutually beneficial.  Only the OP can establish whether there is any scope to negotiate the cost of the monthly for the additional year.

An odd thing to say in reply to my post. Of course only the OP can try and renegotiate the monthly cost as part of an extension - that's why I suggested they give it a go. Might work, might not.

In terms of lease extensions though, in my experience with three different finance companies in recent years, all will do it - whether informally for a short-term extension or formally for, say, an additional full year, or even longer. It isn't necessarily the case that the extension offer is only being made here because of the current issues around vehicle availability. However, if the finance companies are struggling to get hold of vehicles just like everyone else, then it's certainly the case that both parties would benefit from an extension.

msubbu

Thank you all for your thoughts and experience in this space. Very much in line with what I was expecting to hear, but always good to double check and get other opinions.