In this guide we take a look at the process of transferring a lease contract for Limited Companies, otherwise known as a Novation.
A Novation is the movement of one vehicle contract from one Limited Company to another Limited Company. A Novation can also move one vehicle contract from a Sole Trader to a solvent Limited Company on an unregulated Finance Lease agreement only. With a Novation, the parameters of the original agreement (e.g. term, mileage and monthly rentals) as well as the contract type remains the same.
A Novation applies to unregulated Contract Hire or Finance Lease agreements only. Both Limited Companies (existing customer and new company) must also be solvent to request a Novation.
There are many reasons why a Novation may be required. In most cases, a Novation is required because the existing customer (Limited Company) has been bought out by another Limited Company and the assets need to be moved across. Another reason may be because the driver of the vehicle has moved jobs and it has been agreed between the existing customer (Limited Company) and the new customer (Limited Company) to also move across the lease vehicle.
No because this option is not available with all funders. A Novation is at the discretion of the finance provider.
A Novation will also not be provided where:
For Insolvency Novations, please contact Nationwide Vehicle Contracts on 0345 811 9595 to discuss.
The cost of a Novation varies from funder to funder. On average, the total cost is £400 excl. VAT subject to approval by the finance provider. This fee represents two costs:
The £400 exc VAT fee is payable by debit or credit card or by BACs payment and and will be taken prior to finance proposal. This fee is payable even if you do not complete for any reason but does not apply if you fail to pass eligibility checks.
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 both companies are solvent.
Contact the Nationwide Vehicle Contracts team on 0345 811 9595 or via email to request a Novation. Please note, we will only be able to discuss a Novation 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 Novation and will be in touch to advise accordingly.
At this point you will need to pay the £400 exc VAT admin fee which is payable by debit or credit card or by BACs payment direct to Nationwide Vehicle Contracts. This fee is payable even if you do not complete for any reason but does not apply if you fail to pass eligibility checks.
If you are eligible, the new Limited Company (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 Business Finance Form 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. We will then forward the Deeds and covering letter across to you. Please check the documentation carefully to ensure everything is correct.
Print off three copies of the Deeds on plain paper and ensure all parties (existing customer, new customer and funder) sign the Deeds. Two signatures (2 Directors or 1 Director and 1 Company Secretary) from each company will be required.
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.
Upon receipt of the correct documentation, the funder will update the system with the new details. A copy of each countersigned Completed Deed will be sent to you and the funder will keep the third set of Deeds.
The Novation will only be effective from the Date that the funder signs the Deeds.
The process involved in a Novation 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 two to three months to process depending on when the Deeds are signed by all parties.
Have a question regarding a Novation? Contact the Nationwide Vehicle Contracts team on 0345 811 9595 (option 3).