Selling leased car to unrelated third party - help?

CapabilityJones

After some advice! I have a car on a lease agreement that ends next month. I really like the car and the other options like leasing a new one aren't attractive (interest rates and other factors mean I'd be paying double what I currently am for a slightly newer version of what I already have). 

I asked the finance company if I could just buy the car from them outright. I have a bit of money saved and can get a loan for the remainder. They've said they can't sell it directly to me, but I can sell it on their behalf to a third party - there was a strong insinuation of 'we're giving you this information, we can't tell you what to do with it but come to your own conclusions', which I took to mean I could sell the car to someone and then just buy it straight back from them.

I have a few questions about this - firstly, the form they sent over says it must be sold to an unrelated third party. I know my family are therefore out, but could my girlfriend do it? We live separately so she has a different surname and address, though she might move in with me within the year. Would it be better to ask a friend I can trust to do it?

Second, how would the money work? Would I need to give the money to the third party so they can 'buy' the car, or can I just say they've paid me and pay it straight from my own account? The finance company has asked for either a cheque or bank transfer and it doesn't say it must be directly from the third party buyer. 

Thirdly, once the car belongs to the third party, do they need to sell it to me for the full value of the car or it is okay to do it for a token amount like a fiver? 

This is the first car I've owned so I'm a bit in the dark as to how these things work, hoping someone can shed some light

mr_stripey

Sounds a bit dodgy to me.

By definition, a lease car does not belong to you, but to the leasing company.

So you surely cannot sell something which does not belong to you?

Happy to stand corrected by more knowledgeable posters though.

CapabilityJones

mr_stripey said:

So you surely cannot sell something which does not belong to you?

Well so, the way they've worded it in the form they sent it over is that I would be acting as their agent to sell to a third party. They're granting me permission to sell on their behalf.

400ixl

Have seen it where it is the partner of the lease holder who has purchased, so not sure how strictly the 3rd party is governed.

Once whoever has purchased it has the v5c in their name as the registered keeper, then I would have thought they can just transfer ownership to you. There doesn't need to be a monetary value involved in that side as far as i know as its not like a house where there is stamp duty payments or other taxes involved. I would get a written receipt for a zero value sale to make sure you can prove you have taken ownership.

No personal experience as I don't finance cars but there are threads on here that have discussed it in detail in the past.

Grumpy_chap

CapabilityJones said:

After some advice! I have a car on a lease agreement that ends next month. I really like the car and the other options like leasing a new one aren't attractive (interest rates and other factors mean I'd be paying double what I currently am for a slightly newer version of what I already have). 

I asked the finance company if I could just buy the car from them outright. I have a bit of money saved and can get a loan for the remainder. They've said they can't sell it directly to me, but I can sell it on their behalf to a third party - there was a strong insinuation of 'we're giving you this information, we can't tell you what to do with it but come to your own conclusions', which I took to mean I could sell the car to someone and then just buy it straight back from them.

I have a few questions about this - firstly, the form they sent over says it must be sold to an unrelated third party. I know my family are therefore out, but could my girlfriend do it? We live separately so she has a different surname and address, though she might move in with me within the year. Would it be better to ask a friend I can trust to do it?

Second, how would the money work? Would I need to give the money to the third party so they can 'buy' the car, or can I just say they've paid me and pay it straight from my own account? The finance company has asked for either a cheque or bank transfer and it doesn't say it must be directly from the third party buyer. 

Thirdly, once the car belongs to the third party, do they need to sell it to me for the full value of the car or it is okay to do it for a token amount like a fiver? 

This is the first car I've owned so I'm a bit in the dark as to how these things work, hoping someone can shed some light

mr_stripey said:

Sounds a bit dodgy to me.

By definition, a lease car does not belong to you, but to the leasing company.

So you surely cannot sell something which does not belong to you?

Happy to stand corrected by more knowledgeable posters though.

This is not unusual or dodgy.

The lease company cannot directly sell the car to the lessee because of the rules around VAT and the possibility that the lease agreement could retrospectively be considered a loan / HP agreement  which changes the regulations that apply.

The lease company are not allowing the OP to sell the item they don't own.  If there is a suitable unconnected party, then the lease company will sell the vehicle to that unconnected party.  It is convenient that, in this case, the OP seems to have identified a lady that he knows who may be interested in buying the vehicle.

I have heard of arrangements where individuals arrange the sale from the lease company to a friendly local garage who agree to sell straight on (possibly for a fee).  It can be easier for a user to buy an ex-lease company car (theirs) because the employee is not connected to the lease, unlike a personal lease which this seems to be.

Has the OP received a price as yet for the end of lease sale.  Lease companies can be expensive in this type of situation such that the lessee gives up and lets the car go to auction anyhow.

SteveJW

In my opinion and having dealt with many end of lease on behalf of a local authority

The term unreleated refers to the lease, ie a third party to the lease

Not a relation of the lessor

CapabilityJones

SteveJW said:

In my opinion and having dealt with many end of lease on behalf of a local authority

The term unreleated refers to the lease, ie a third party to the lease

Not a relation of the lessor

The letter they've sent does specifically say "The vehicle must be sold to a person(s) who is unrelated to you or your business e.g. an independent third party" so I believe it does refer to me, not the lease.

Grey_Critic

From what I have been told - not up to date but lease companies have been refusing to sell the vehicles at end of lease - I know several people who used to buy at the end of lease for their wife/partner.and would do so if they got the chance

 I would hazard that the selling to a third party on behalf of the lerasing company could create many problems.. Leasing companies are not daft

CapabilityJones

Grumpy_chap said:

Has the OP received a price as yet for the end of lease sale.  Lease companies can be expensive in this type of situation such that the lessee gives up and lets the car go to auction anyhow.

Yes - it's perhaps not the absolute cheapest but it is comparable to the prices of the same car being sold secondhand that I've seen on autotrader, and I did haggle it down a little bit from their initial offer using that information.

So you think it would be fine for my girlfriend to 'buy' the car and then we can just transfer the ownership to me a month or so later?

DullGreyGuy

Grey_Critic said:

From what I have been told - not up to date but lease companies have been refusing to sell the vehicles at end of lease - I know several people who used to buy at the end of lease for their wife/partner.and would do so if they got the chance

 I would hazard that the selling to a third party on behalf of the lerasing company could create many problems.. Leasing companies are not daft

Dont get hung up on the fact the OP is acting as an introducer of their associate who wants to buy the car. The sale is directly between the leasing company and the introduced buyer and is no different on paper to the lease company selling the car at auction to whoever the auction firm identifies as the buyer. 

The issue comes with the second step, that the vehicle is then immediately sold again back to the hirer and therefore were HMRC to piece it all together they could say it was a scam but then again the OP could find out who won the car at auction and immediately buy it from them. 

The request that the OP's introduced buyer is not related is inevitably to create extra separation however ultimately there is no formal record of who owns cars and HMRC isnt involved in the change of registered keepers plus private sales of your own vehicle are not reportable activities to HMRC and so its all belts and braces really.

Jumblebumble

Grumpy_chap said:

CapabilityJones said:

After some advice! I have a car on a lease agreement that ends next month. I really like the car and the other options like leasing a new one aren't attractive (interest rates and other factors mean I'd be paying double what I currently am for a slightly newer version of what I already have). 

I asked the finance company if I could just buy the car from them outright. I have a bit of money saved and can get a loan for the remainder. They've said they can't sell it directly to me, but I can sell it on their behalf to a third party - there was a strong insinuation of 'we're giving you this information, we can't tell you what to do with it but come to your own conclusions', which I took to mean I could sell the car to someone and then just buy it straight back from them.

I have a few questions about this - firstly, the form they sent over says it must be sold to an unrelated third party. I know my family are therefore out, but could my girlfriend do it? We live separately so she has a different surname and address, though she might move in with me within the year. Would it be better to ask a friend I can trust to do it?

Second, how would the money work? Would I need to give the money to the third party so they can 'buy' the car, or can I just say they've paid me and pay it straight from my own account? The finance company has asked for either a cheque or bank transfer and it doesn't say it must be directly from the third party buyer. 

Thirdly, once the car belongs to the third party, do they need to sell it to me for the full value of the car or it is okay to do it for a token amount like a fiver? 

This is the first car I've owned so I'm a bit in the dark as to how these things work, hoping someone can shed some light

mr_stripey said:

Sounds a bit dodgy to me.

By definition, a lease car does not belong to you, but to the leasing company.

So you surely cannot sell something which does not belong to you?

Happy to stand corrected by more knowledgeable posters though.

This is not unusual or dodgy.

The lease company cannot directly sell the car to the lessee because of the rules around VAT and the possibility that the lease agreement could retrospectively be considered a loan / HP agreement  which changes the regulations that apply.

The lease company are not allowing the OP to sell the item they don't own.  If there is a suitable unconnected party, then the lease company will sell the vehicle to that unconnected party.  It is convenient that, in this case, the OP seems to have identified a lady that he knows who may be interested in buying the vehicle.

I have heard of arrangements where individuals arrange the sale from the lease company to a friendly local garage who agree to sell straight on (possibly for a fee).  It can be easier for a user to buy an ex-lease company car (theirs) because the employee is not connected to the lease, unlike a personal lease which this seems to be.

Has the OP received a price as yet for the end of lease sale.  Lease companies can be expensive in this type of situation such that the lessee gives up and lets the car go to auction anyhow.

Hmm

Leaseplan /Nationwide Vehicle contracts certainly can and will sell direct

I wonder how they get around the VAT rules you quote?
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