Transfer of Contract: Transferring a Lease Vehicle to Another Person
Here at Nationwide Vehicle Contracts, we are asked many questions by customers regarding their lease contract. One question that is often asked is regarding transferring a lease vehicle to another party, otherwise known as a Transfer of Contract.
A Transfer of Contract can be a confusing process for a customer because they are often dealt with on a case-by-case basis. This makes it difficult to find out how long the process takes, as well as details regarding eligibility. To help make the process easier to understand, we take a look at how a Transfer of Contract works and why you would need it, as well as the criteria, fees and the process involved.
What is a Transfer of Contract?
A Transfer of Contract is the movement of one vehicle on Contract Hire or Personal Contract Hire from one customer to another. With a Transfer of Contract, the same parameters of the original agreement still apply (e.g. monthly payments, term and annual mileage remain the same) but both parties must sign a Transfer Modifying Agreement.
Why would a Transfer of Contract be required?
There are many reasons why a customer may want to request a Transfer of Contract. Perhaps personal circumstances have changed (such as pregnancy, relocation or redundancy) meaning you want to break from your lease contract early? Or perhaps early termination is simply not appropriate for you? A Transfer of Contract gives you the option to exit the terms of your lease early by transferring it over to someone else who carries on paying the monthly payments. The benefit for the person receiving the car is that they can get an almost new vehicle at a lower cost with no down payment as all the upfront costs have been covered.
What is the criteria for a Transfer of Contract?
A Transfer of Contract is subject to several criteria:
- The original lease agreement must be either Contract Hire or Personal Contract Hire.
- The vehicle can move from Contract Hire to Personal Contract Hire or vice versa.
- The vehicle can move from Regulated to Unregulated or vice versa on Contract Hire to Personal Contract Hire.
- The new customer must be credit approved by the finance provider prior to the Modifying Agreements being requested.
- All financials and expiry date of agreement will remain the same.
- Only 1 transfer will be allowed per vehicle for the duration of the contract.
- An administration fee of £500 exc VAT will be charged per vehicle Transfer of Contract request.
- The vehicle must have more than 12 months remaining on the contract.
- For Personal Contract Hire agreements, a Transfer of Contract can only be done where the total rentals paid is more than £1500 inc VAT.
A Transfer of Contract is only available between private individuals or when a Limited Company wishes to transfer a lease to a private individual or vice versa. If the lease transfer is between a Limited Company to another Limited Company, this is known as a Novation.
Can anyone apply for a Transfer of Contract?
No, because this option is not available with all funders. A transfer of contract is at the discretion of the finance provider and does not form any part of the customer terms and conditions or finance agreement.
A Transfer of Contract will also not be provided where:
- There is no credit approval in place for a Contract Hire or Personal Contract Hire agreement.
- The vehicle is being moved from or to a Finance Lease, Lease Purchase or Contract Purchase agreement.
- The vehicle has been transferred before.
- For Personal Contract Hire agreements, no transfer can be done where the total rentals paid is less than £1500 inc VAT.
- The existing account has arrears or is subject to Default or Insolvency.
- The vehicle has received a Contract Hire or Personal Contract Hire extension.
- The vehicle has less than 12 months to run on the contract.
- The Modifying Agreement has not been completed in full.
How much does it cost?
In the instance that a transfer of contract name is required for a private individual, sole trader, partnership or LLP, Nationwide Vehicle Contracts Ltd will charge a fee of £500 excl. VAT subject to approval by the finance provider. This fee represents two costs:
- £250 (exc VAT) of which is paid to the finance provider for the administration of the Transfer of Contract agreement.
- £250 (exc VAT) of which represents the costs incurred by Nationwide Vehicle Contracts for processing the arrangement on your behalf.
The transfer of contract fee is payable by debit or credit card or by BACs payment and will be taken on receipt of your signed finance documentation detailing the amendment. Credit card payments will be subject to a 1.95% charge.
I want to request a Transfer of Contract, what do I do?
It goes without saying that only existing Nationwide Vehicle Contracts customers can apply for a Transfer of Contract with us. If your lease vehicle is with another provider, you must contact them in the first instance to see if you are eligible for a Transfer of Contract.
If you are a customer of Nationwide Vehicle Contracts, follow the below steps to request a Transfer of Contract.
- Read through the criteria list above to ensure you meet the requirements before calling us. Specifically, we ask you to check that you have more than 12 months remaining on your contract and that for Personal Contract Hire agreements, total rentals paid is more than £1500 inc VAT.
- Contact the Nationwide Vehicle Contracts team on 0345 811 9595 or via email to request a Transfer of Contract. Please note, we will only be able to discuss a Transfer of Contract with the person named on the finance documentation and you must have your registration number to hand. Email requests can take up to 3 working days to be actioned so if your request is urgent, please call us.
- We will contact the funder to see if you are eligible for a Transfer of Contract and will be in touch to advise accordingly.
- If you are eligible, the new customer (who will be taking on the lease contract) must fill out a Finance Application form as a credit check will be required. You can fill out a Personal Finance Form (for Personal Contract Hire agreements) or Business Finance Form (for Contract Hire agreements) online. Please note, it can take up to 5 working days for us to receive a credit decision back from the funder.
- If your finance application has been approved, we will be in touch. At this point, you will need to send us copies of your proof of ID and address, along with the current mileage on the vehicle.
- Once we have received this information, the new Modifying Agreement, a copy of the original agreement and any accompanying Terms and Conditions will be sent to us by funder. We will then email these across to you. Please check the documentation carefully to ensure everything is correct.
- Print off the agreement on plain paper and ensure all parties (existing customer and new customer) sign the Modifying Agreement and direct debit mandate You will then need to return the signed documentation to us by post as we need the originals.
- Once we have received the signed documentation, we will send this to the funder for review. Please allow 3-5 working days for this to be received as the funder will not accept scanned copies of the agreement.
- You must continue to pay the monthly rentals until the Transfer of Contract is completed and a new start date is given to you.
How long will the process take?
The process involved in a Transfer of Contract can vary case to case as it is often dependent on the funder. We advise that from beginning to end, the process can take up to 4 weeks so please bear this in mind when contacting us.
Please note, you must continue to pay the monthly rentals until the Transfer of Contract is completed and a new start date is given to you.
Have a question regarding a Transfer of Contract? Contact the Nationwide Vehicle Contracts team on 0345 811 9595 (option 3) or leave a comment below.