Coronavirus Q&A: How it’s affecting car leasing

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Author: | Updated: 24 Jun 2020 15:23

Boris Johnson has described the Covid-19 pandemic as “the worst public health crisis for a generation”. It's a rapidly changing scenario and people are naturally seeking clear, accurate information from experts. So what's happening when it comes to car leasing?

As the car leasing experts, we've put together this handy Q&A.

Can I order a new car during the coronavirus outbreak?

Yes, at Leasing.com we have core staff keeping the business running and working remotely. You can still research and compare deals online, without having to leave the house. Once you've selected your car and lease deal, you can apply for finance online and sign all paperwork electronically and arrange delivery to your door, or a ‘click and collect’, where possible.

I've ordered a new car, will it be delayed?

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The car industry is one of the most interconnected industries in the world and it's no surprise to learn that there have been widespread factory closures over the past few months. However, many manufacturers are re-starting production across Europe and the world.

Ford restarted initial production at its Dagenham Engine Plant in Essex and Bridgend Engine Plant in South Wales on 18 May, which meant that all of Ford’s European manufacturing facilities are now back at work. Meanwhile, the first Range Rover built under new social distancing measures has already driven off the production line at Jaguar Land Rover’s manufacturing plant in Solihull. Effective social distancing, hygiene and health monitoring measures are in place at all manufacturing facilities.

Social distancing at Jaguar Land Rover.

Elsewhere, Nissan’s Sunderland plant today (08/06) resumed vehicle production after almost three months. The new Nissan Juke was the first car off the line, and improved safety measures include new separation between operators, such as screens, barriers and dividers, as well as one way systems across the site. Rest areas have been redesigned and break times rescheduled to support social distancing and remove common touchpoints. 95% of Nissan’s dealer network across Europe has now also reopened.

What does this mean for new cars? Well, the closures will lead to longer waiting times on factory orders. So if you’ve recently ordered a new car that's factory built, there’s a chance your delivery may take a little longer than normal. You will be kept up to date on your vehicle's progress.

Are there cars available right now?

Despite manufacturer shutdowns, there are plenty of cars 'in stock' that have already been built that you could be driving in a matter of weeks. They’re a great option if you don’t want to wait for a car to be built, although you may have to be flexible when it comes to specification and colour options. You can compare in stock deals here.

Are there cars available right now?

Are lease car deliveries still taking place?

It’s a fast-moving situation, but currently there are deliveries of new cars taking place, depending on the funder and the dealerships. As vehicle delivery drivers tend to be semi-retired or senior in age, driver shortages as a result of self-isolation and social distancing may affect supply.

New guidance has also confirmed that, although car showrooms must remain closed until at least 1 June, they can offer a ‘click and collect’ service in the meantime too.

“All retail, other than those exempt, must close their premises to members of the public. However, staff may be present to make deliveries or provide services in response to orders such as those through telephone, online, or mail.
Click and collect services can also operate, though customers must not enter premises,” the guidance states.

The Department for Transport has also made it clear that logistics, including the collection and delivery of vehicles, should carry on during the lockdown, provided that it can be done in accordance with Coronavirus safety guidelines.

From 1 June when the car showrooms will re-open, the process should return back to some form of new normal.

All delivery drivers are instructed to sanitise every vehicle at handover, cleaning all the touchpoints such as steering wheel, gear selector, door handles and so forth.

How do I sell my old car?

At Leasing.com, we have partnered with Wizzle - a free, car selling comparison site. Wizzle allows you to compare multiple offers from across the market and, because you can upload pictures of your car, you could get an even better price if it's in great condition.

If you are happy with an offer, the dealer will contact you on the phone number you provide. They will arrange payment directly into your account via bank transfer or bankers draft and will book an appointment with you so they can come and inspect and collect the vehicle from your driveway. Sell your car here.

My lease is due to end soon, what can I do?

Currently you can hand back your car as normal and, of course, vehicle inspection staff will adhere strictly to health and safety guidelines. If your lease deal is due to end soon and you are social distancing, you can discuss an extension with your lease provider. Depending on providers, a range of options are usually available, including a formal extension which allows you to extend your lease agreement by three months or more, or an informal extension, which is available for a shorter rolling period.

Am I still liable for company car tax on a vehicle if I've been furloughed or it can’t be collected?

If you have been furloughed or are working from home because of coronavirus and have a company car, it’s still treated as being made ‘available for private use’.

According to the BVRLA, HMRC has also published new guidance on the treatment of Benefit-in-Kind and company cars during the Covid crisis. Where restrictions on movement apply because of coronavirus and prevent the car from being handed back or collected, HMRC will accept that a company car is unavailable in the following circumstances:

  • where the contract has terminated - from the date that the car keys (including tabs or fobs) are returned to the employer or to a third party as instructed by the employer;
  • where the contract has not been terminated – after 30 consecutive days from the date that the car keys (including tabs or fobs) are returned to the employer or to a third party as instructed by the employer.

It also recognises that following relaxation of coronavirus restrictions it may take some time to return cars where contracts have been terminated. If an employee continues to have no access to the keys until the car is collected from them, HMRC will still regard the car as being unavailable.

What if I’m unable to make my lease payments?

The Finance and Leasing Association says that supporting consumers over the next few months will be "absolutely vital – especially for those whose income is severely affected by the coronavirus disruption". If you are in any financial difficulty as a result of coronavirus, or any other reason, please contact your lease provider as soon as possible to discuss your options.

The name of the leasing company/funder that your agreement is with can be found on your regular lease statements or on your bank statement. Their customer service telephone number can be found on their website.

There are a number of options that you may wish to consider, including: request a temporary payment holiday for your monthly payments; request an annual mileage review, which may bring down your monthly payments; ask about the possibility of downgrading your lease vehicle to reduce monthly payments.

If you are more than halfway through your lease contract, you could ask for the termination fee to settle your lease agreement early. This is likely to be at least half of your outstanding payments.

The Finance and Conduct Authority (FCA) has also announced a package of measures to directly support consumers facing payment difficulties due to coronavirus (Covid-19). The FCA expects firms to provide a three-month payment freeze to customers who are having temporary difficulties meeting finance or leasing payments due to coronavirus. If customers are experiencing temporary financial difficulties due to coronavirus, firms should not take steps to end the agreement or repossess the vehicle. More can be found on the FCA motor finance proposals here.

If you are a business owner or employer, talk to your bank regarding eligibility for one of the government’s COVID lending schemes. You can find out what financial support you can get for your business here.

If you have any other questions about car leasing, please contact one of our experts via [email protected]. Although we are the car leasing experts, we are not a financial provider and as such any cancellation or negotiation over payment can only be conducted with your lease provider.

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