Written off lease car - advice needed.

sotal

Hi, I'm hoping for some advice,

We have a car on a personal lease, unfortuantely it was in an accident (no other party) and the car was written off by the insurance.

The insurance have offered market value of the car - I can disagree with the amount offered and it seems fair.

However the write off department have given their WDV (Written down Value) which is quite a bit higher, leaving me with several thousand to pay.

I know about GAP insurance, however that wasn't available 12 months ago as it was being investigated by the FSA.

My query is around the fact that the car only has a few weeks left, all monthly payments have been made, so there is no early exit fee etc, they have sent me the option to purchase the car for market value (actually £200 less than the insurance are offering to pay)

I spent a good few hours on the phone speaking to both the insurance company and the lease company to see if it was acceptable for me to purchase the vehicle and then have the insurance money paid to me, after discussion with support teams and senior staff - I was told it was fine to do this.

So I started the process and completed the purchase forms, uploaded ID etc,

Then yesterday the insurance company messaged me to say they had initiated payment to the insurance company and advised me of the several thousand pounds shortfall that I would have to pay.

I phoned the insurance company and the person I spoke to said it wasn't possible to do it the way they had agreed, and that it was too late now as the payment had been started. They said the insurance payout has to go to whoever owned the vehicle at the time of the accident (depite telling me otherwise previously)

So - I'm now facing a few thousand pounds difference. 

Is there anything I can do?

Are the lease company allowed to charge whatever they want ever want, even though they have told me what they actually value it at, as that was what they wanted to sell it to me for?

With rounding up, the write off department want £14,000 and for me to purchase (so the actual value) is £11,000 (which matches what the insurance company are paying out)

DullGreyGuy

Do you have the agreement in writing from the insurer that you can buy the car then have the settlement made to you? If not can you remember when the call was?

Surprised the lease company were willing to do it either as one they are giving away money they are due and two there is normally significant VAT impacts for them to sell the car to the hirer.

Ultimately it's a complaint to the insurer that they have reneged on the agreement and document the financial impact it will have on you. 

sotal said:
Then yesterday the insurance company messaged me to say they had initiated payment to the insurance company 

This presumably was supposed to say finance company?

sotal

DullGreyGuy said:

Do you have the agreement in writing from the insurer that you can buy the car then have the settlement made to you? If not can you remember when the call was?

Surprised the lease company were willing to do it either as one they are giving away money they are due and two there is normally significant VAT impacts for them to sell the car to the hirer.

Ultimately it's a complaint to the insurer that they have reneged on the agreement and document the financial impact it will have on you. 

sotal said:
Then yesterday the insurance company messaged me to say they had initiated payment to the insurance company 

This presumably was supposed to say finance company?

Yes that was supposed to say to the lease company.

They have the notes on file and can see them where they told me it would be OK, but they are saying that they thought it was regular finance which would be OK to do that with, but are saying with a lease they can't due to the regular finance having the driver as the owner, but with a lease the lease company was the legal owner.

With regards to the VAT yes, the invoice does show that they are including VAT within the purchase price - which further goes to show how they are ripping me off with the WDV.

It just seems mad that they can effectively demand whatever value that they want to, regardless of what they know the vehicle is actually worth.

DullGreyGuy

You arent the owner under a HP agreement either (PCP legally being a HP agreement with a balloon) until the final payment has been made, hence why its called "Hire Purchase". You may be the registered keeper during the hire period of the agreement but you arent the legal owner (at least under the majority of agreements).

Do you recall if you were clear it was a lease company? I mean here you have said "lease company" rather than "finance company"? If thats your normal parlance then I'd be registering the complaint and telling them to listen to the call recording as you did make it clear it was a lease not HP

The VAT treatment is more complex... under HP, which is ultimately a contract of sale, you are charged the full VAT up front and its part of the finance. The finance payments are then paid without any explicit VAT paid on them because Finance is excluded from VAT. Leasing isnt a contract of purchase so the company can recover the purchase VAT from the vehicle and you dont pay VAT on the purchase but instead pay VAT on the lease payments. When the vehicle is sold then VAT is charged but obviously on the now much lower value vehicle. It's one of the reasons why Leasing is often cheaper than PCP. If they sell the car to you then HMRC could argue it was actually always a contract of sale not of hire and so come after them for the extra VAT... anyway its a them problem not a you problem but most leasing companies won't sell to you but may suggest a friend may like to buy the car and were the friend to sell it to you at the same price would be nothing to do with them. 

sotal

I don't recall if I was explicit about it being a lease on the call,

Slightly off topic, but this particular lease company seem to often sell at the end, I know that a lot of people purchase at the end of the lease and the pricing is competitive.

Herzlos

If the lease company were willing to sell it to you at a price just under the insurance value, will they be happy with just getting the insurance money and writing off the difference? It'd leave them in the same position minus the tax hassle regarding selling you the car.

I don't think the insurance company will budge; it's the lease companies car so that's who they have to pay.

paul_c123

The issue seems to be there's 3 different values for your car:

The lease company's write off team's WDV (Written Down Value)
The insurance company's market value
The lease company's offer to sell

Forget about notionally "buying" the car and the insurance money being redirected to you as a settlement once that's done - it sounds like a weird scheme and even if its suggested, unless it actually went through and you had the cash from the insurance company in your account (minus the cash from buying it, obvs) even if they promised it, it has a high chance of unwinding before it completed.

Anyway, with that being said you have good reason to go back to the lease company and query why their write off team is valuing the car incorrectly, given that you have 3 valuations, 2 of which are close and one which is miles away.