Why can't you buy a car at the end of a lease?
Discussion
Morning all,
This is just hypothetical musing, so no specific company in mind!
Of course no PHer can comprehend the notion of not having enough cash to pay for anything you could ever want at any moment, but just imagine for one moment if you will that you're some nouveau middle class parvenue like that Branson chap, and you might find yourself having to look at ways of financing your new car!
Were you ever to find yourself in such an ignominious position, you would discover that of the various financial models available to you, Leasing makes very clear that you will not own the vehicle, nor will you have the option to do so at any point in the future.
My question is why not?
I'm not talking about a contractual right with agreed pricing or anything like that, but given that a car is a depreciating asset which the finance company presumably aren't going to want to keep in their own private collection, they presumably have to pay for it to be prepped for sale/auction and so forth before gambling on how quickly it will sell, how much they'll get for it, etc.
Wouldn't it make perfect sense, as the end of the lease approaches, for them to get in touch and say "you need to return your car in a month, but if you prefer, we'll sell it to you for £x?"
This is just hypothetical musing, so no specific company in mind!
Of course no PHer can comprehend the notion of not having enough cash to pay for anything you could ever want at any moment, but just imagine for one moment if you will that you're some nouveau middle class parvenue like that Branson chap, and you might find yourself having to look at ways of financing your new car!
Were you ever to find yourself in such an ignominious position, you would discover that of the various financial models available to you, Leasing makes very clear that you will not own the vehicle, nor will you have the option to do so at any point in the future.
My question is why not?
I'm not talking about a contractual right with agreed pricing or anything like that, but given that a car is a depreciating asset which the finance company presumably aren't going to want to keep in their own private collection, they presumably have to pay for it to be prepped for sale/auction and so forth before gambling on how quickly it will sell, how much they'll get for it, etc.
Wouldn't it make perfect sense, as the end of the lease approaches, for them to get in touch and say "you need to return your car in a month, but if you prefer, we'll sell it to you for £x?"
You can’t with Leasys (FCA’s leasing company), but they will allow a friend or relation to buy it.
Or interestingly you can approach a franchised dealer who can also purchase it direct thus avoiding collection, inspection, auction costs etc.
I expect there are legal barriers to actually purchasing it yourself.
Or interestingly you can approach a franchised dealer who can also purchase it direct thus avoiding collection, inspection, auction costs etc.
I expect there are legal barriers to actually purchasing it yourself.
cslwannabe said:
You can. VWFS will offer you a price to purchase at the end of the lease and I know people who have done so.
I've just done this.Saved over £10k on the original purchase price of the vehicle when you add the monthly payments made to the end of contract purchase price.
The process was handled entirely online and was ridiculously straightforward.
kambites said:
As above you can at the end of a personal lease. I'm pretty sure you cannot at the end of a business lease for tax reasons (it'd basically be a way to buy a personal car income-tax free).
VWFS don't give two hoots who pays for the vehicle at the end of the lease.Why would there be tax issues ? If Joe Public wanted to buy an ex-business lease vehicle, they'd be doing so with money they'd already paid tax on.
Lease is treated differently from a regulatory and HMRC perspective. They have different requirements to other types of funding like hire purchase. One of the key defining characteristics of a 'lease' is there is no option to purchase.
They can sell the car to anyone else apart from 'you' though, so firms often offer sale to a third party at the end, like your missus.
They can sell the car to anyone else apart from 'you' though, so firms often offer sale to a third party at the end, like your missus.
I've just come to the end of a three year lease on a Mazda with Santander, I offered to give them retail price for the car as I liked it, and knew there were no issues, but they were not interested.
I handed it over in the north west and the collection guy said he was taking it down to Milton Keynes the next day, so they obviously had plans for it.
I handed it over in the north west and the collection guy said he was taking it down to Milton Keynes the next day, so they obviously had plans for it.
Hire Purchase/PCP you obviously can, as its part of the payment model (Balloon payment), but I wasn't aware of the lease option to buy the car, so interested to hear more - as monthly lease prices are typically lower than HP/PCP prices.
However, I have never had a lease directly with VWFS.
However, I have never had a lease directly with VWFS.
SS2. said:
Why would there be tax issues ?
Because there's a big tax break on leasing cars for company purposes which isn't supposed to be means to buy a car without paying income tax. If you could buy after a business lease, what would stop someone from "leasing" a 0% BIK car for one month for 99% of the new price, then "buying" it for the final 1% afterwards and hence paying no income tax on the purchase? That's certainly the reason the leasing company my employer used to use for BIK cars stated.
Edited by kambites on Wednesday 4th November 09:31
SS2. said:
cslwannabe said:
You can. VWFS will offer you a price to purchase at the end of the lease and I know people who have done so.
I've just done this.Saved over £10k on the original purchase price of the vehicle when you add the monthly payments made to the end of contract purchase price.
The process was handled entirely online and was ridiculously straightforward.
When I leased cars for work, fleet of 500, the end user was not allowed to buy the car due to the way that VAT is charged. It may have changed but the lease companies get all the VAT back as the car use is 100% business related. We used to buy all our cars but when the vat allowance came in we changed to leasing to reduce the costs. As a manufacturer our drivers had private use so it was not classed as 100% business use, whereas the lease companies business is leasing.
Hope this makes sense, it may have changed since I retired
Hope this makes sense, it may have changed since I retired
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