Car Leasing - Terminate Audi HP contract

[tugglesf239]

Hi folks

Currently 2 years into a 4 year hire purchase lease on an Audi S5. Due to some unexpected change in family circumstance (divorce.... ) i am investigating to possibility to switching to another vehicle.

This is not based on running costs, or hire purchase rates etc. Its just that an S5 is not quite as practical as i need for living as a single parent with two young kids, a mucky Springer spaniel and a house that requires tip runs, furniture shops etc etc

Now my guy feel is that im pretty much locked in for another two years unless i pay a huge chuck to Audi. However i have heard that after a period of the loan has elapsed then more options become available regarding tranfer or termination etc

Im going to get stuck into the terms and conditions this evening.

wanted to ask you learned lot first though

Like i said i am not hopeful, however i need to understand my options (or lack of them)

Thanks in advance

 

[Lord Tyrion]

I'm out of my depth on the intracacies of these agreements but if this was done through Audi then it may be worth speaking to them / the Audi dealer and see if they are open to you changing to another Audi. My BiL was 3/4 of a way through one of his agreements with Mercedes and the dealer persuaded him to change early to another Merc before the agreement ended. They were happy to sort that all out, it was in their interests and tied him into Mercedes for another period. Audi may feel the same and be open to a suggestion of you swapping to an Audi that suits you better now.

 

[*TQ*]

My understanding (and I'm far from an expert) is if half or more of the total loan has been paid off you are entitled to return to the car and cancel the agreement at no extra cost but don't expect the dealership/finance company to be very happy about it.

 

[GreiginFife]

Much depends on the actual finance type. HP and PCP are very different regards T&Cs and penalties.
There is a general "rule" (and I use that losely) that once you have paid off 50% of the initial finance then you can terminate without fee or prejudice. That 50% is normally (but not always) the figure after your 48th payment.
You can pretty much hand the car back at anytime if you repay the outstanding finance. After only 2 years on a S5 its probably you will still have negative equity and you would need to cover that PLUS a deposit if required on another deal.
I am looking at shopping my 335d Touring in after 18 months because I hate it. Going to take a 2k hit but been savvy and waited until Merc dealer had a huge deposit contribution offer on that softens the blow and gets me my C43 coop back.

 

[SwingsitlikeHogan]

Just been looking at car finance, and my understanding is that the 50% break point is for PCP type agreements - but that it does not apply to Leasing/HP agreements.

I didn't understand the difference until it was pointed out to me that for PCP I pay a significant deposit - typically £3-4k, whereas for Lease/HP you don;t - the initial payment might only be 3, 6 or 9 months lease charge. Also for PCP in addition to being able to hand the vehicle back once 50% of PCP finance is paid through monthly payments (see GiF) I can buy myself out the agreement at any time by buying the car, or wait until the end and pay the balloon to buy it - or just hand it back.

That's why for our new car we have gone the PCP route. We intend to buy it in a couple of years and keep for however long.

We could not do that with Lease/HP - yes we could have paid the outstanding finance if we decided to pull out early - but we would not have owned the car.

And so I fear that if the financing is Lease/HP then the answer to OP question is an unfortunate one.

 

[GreiginFife]

Just been looking at car finance, and my understanding is that the 50% break point is for PCP type agreements - but that it does not apply to Leasing/HP agreements.

I didn't understand the difference until it was pointed out to me that for PCP I pay a significant deposit - typically £3-4k, whereas for Lease/HP you don;t - the initial payment might only be 3, 6 or 9 months lease charge. Also for PCP in addition to being able to hand the vehicle back once 50% of PCP finance is paid through monthly payments (see GiF) I can buy myself out the agreement at any time by buying the car, or wait until the end and pay the balloon to buy it - or just hand it back.

That's why for our new car we have gone the PCP route. We intend to buy it in a couple of years and keep for however long.

We could not do that with Lease/HP - yes we could have paid the outstanding finance if we decided to pull out early - but we would not have owned the car.

And so I fear that if the financing is Lease/HP then the answer to OP question is an unfortunate one.

Lease and HP are two different things. PCP and HP are ownership options where lease is not.
HP does have a buy out mechanism with most providers but the terms vary and can be costly.

 

[Maninblack4612]

My understanding is that penalty interest payments on HP agreements are now illegal & that if you settle early you receive a rebate of interest meaning you only pay interest on the outstanding loan for the period it was outstanding. I've just settled a 5 year HP loan after less than a year & there was no penalty.

With regard tp PCP, I did this on my last car but one & finished up after 4 years with a car worth £10 more than the outstanding finance. For the current one, for a 100% loan, the monthly payments on an HP contract over 5 years, at 3.8%, were not much more than a PCP over 4 years. However, at the end of 5 years I'll have a car worth something & no outstanding finance. Did it online withe the bank & it was quick & easy.

You are deffo not "locked in" for another two years.

 

[Jamesbrown]

If you’ve paid 50% of total value of the finance including interest then you can voluntary terminate.

Or you can trade it in and transfer any negative equity into a new deal if your not quite at the point of VT’ing.

 

[Smiffy]

https://www.confused.com/car-finance/finance-options/a-guide-to-cancelling-your-car-finance-early#

 

[tugglesf239]

Not ignoring your brilliant responses

Just maxed at work.

Really appreciate this stuff. I’ll jukp back on later.

 

[Beezerk]

I've got to ask, is Brexit to blame for your divorce? 😁

 

[happyhacker]

You need to establish if you have a PCH (personal contract hire) or PCP or HP.

PCP / HP you can hand back when you have paid over 50% (but that's 50% of the total repayable i.e including interest). PCH you can't do anything with. If you want to hand car back you basically need to pay up the remainder of the monthly payments.

 

[tugglesf239]

Quick update

just spoken to my Audi rep and explained the situation about the HP

Shes has said that first job is to obtain a "preferred rate" from Audi HQ. Then that my two options would be contact termination or the preferred rate model (googling that as we speak)

So fingers crossed i can get something a little roomier.

 

[Severund]

I was in a similar situation and this helped me. You can choose between many cars. It all depends on your budget. I would recommend you to use a car finance calculator in order to find out how much everything costs. I am so sorry that you have to get through a divorce and that you have to sell your car. I know that you loved your Audi and now you have to sell it because it's not practical anymore. Hopefully, things will get better at one point and everything will be back to normal in your life