Car Lease - Netbook Value and Insurance Shortfall

matt_drummer · 1 January at 7:43PM

As this is a money saving site, I have been thinking.

I am not sure LA are being totally genuine in this.

Their car wasn't worth what they value it at and if the lease had reached its natural end they wouldn't have got what they are trying to recover from you.

After establishing what your obligations are it may be worth trying to negotiate a lower settlement.

They may accept a lower amount as it saves them a lot of trouble knowing that they may be on slightly dodgy ground being the car wasn't worth what they thought it would be.

Now you know why they are expecting you to pay you might be able to negotiate from a stronger position without them laughing at you. They will know their car wasn't worth what they thought it would be, they may just accept a lower amount and cut their losses.

Altior · 1 January at 7:49PM

The calculation is clearly diminishing balance dpn at 15%

Year 1 33990 * .85 = 28891.5
Year 2 28891.5 * .85 = 24557.77

This is nothing to do with the valuation of the vehicle. When it is disposed, the capital gain/loss is realised.

Depreciation policy should remain consistent, 15% is pretty typical for road cars.

This is nothing to do with your contribution at this point. They are expecting you to account for the capital loss ie difference between the book value and amount received from insurance settlement.

matt_drummer · 1 January at 7:58PM

Altior said:

The calculation is clearly diminishing balance dpn at 15%

Year 1 39990 * .85 = 28891.5
Year 2 28891.5 * .85 = 24557.77

This is nothing to do with the valuation of the vehicle. When it is disposed, the capital gain/loss is realised.

Depreciation policy should remain consistent, 15% is pretty typical for road cars.

This is nothing to do with your contribution at this point. They are expecting you to account for the capital loss ie difference between the book value and amount received from insurance settlement.

I think your £39,990 is wrong but the answer is correct.

But the cost of the car to LA is not just the cost, they have to add interest, other costs and profit, they are entitled to that.

But you are correct, they want the difference between their book value and the insurance sttlement,

And why shouldn't they?

Especially if the terms of the lease say as much.

matt_drummer · 1 January at 7:59PM

One other thought for the OP.

I don't think you ever said what the term of the lease was.

You say you made 24 monthly rentals, was it a two year lease?

Altior · 1 January at 8:04PM

matt_drummer said:

Altior said:

The calculation is clearly diminishing balance dpn at 15%

Year 1 39990 * .85 = 28891.5
Year 2 28891.5 * .85 = 24557.77

This is nothing to do with the valuation of the vehicle. When it is disposed, the capital gain/loss is realised.

Depreciation policy should remain consistent, 15% is pretty typical for road cars.

This is nothing to do with your contribution at this point. They are expecting you to account for the capital loss ie difference between the book value and amount received from insurance settlement.

I think your £39,990 is wrong but the answer is correct.

But the cost of the car to LA is not just the cost, they have to add interest, other costs and profit, they are entitled to that.

But you are correct, they want the difference between their book value and the insurance sttlement,

And why shouldn't they?

Especially if the terms of the lease say as much.

Ta, corrected the typo!

Altior · 1 January at 8:06PM

It could well be a double whammy unfortunately, as the capital loss has nothing to do with the finance. The OP could still be liable for that.

matt_drummer · 1 January at 8:15PM

There isn't any finance, it's a straight lease agreement.

All they want is the difference between their nbv and the insurance settlement, about £3,500.

I think the OP has a small chance of getting away with less if the negotiate/argue.

Altior · 1 January at 8:20PM

matt_drummer said:

There isn't any finance, it's a straight lease agreement.

All they want is the difference between their nbv and the insurance settlement, about £3,500.

I think the OP has a small chance of getting away with less if the negotiate/argue.

'finance' in loose terminology. if the lease agreement with the manufacturer was three years for example, it might not just end due to the vehicle being written off. I have not looked into how LexAutolease operates, but possibly the book value shortfall might not be the end of the matter. As has been said, it needs a thorough read of the terms to establish what happens if there is a total loss in the middle of the agreement.