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Novations: Transferring a Lease Vehicle from one Limited Company to another Limited Company

In this guide we take a look at the process of transferring a lease contract for Limited Companies, otherwise known as a Novation.

What is 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.

two businessmen securing a deal and handing over a contract

Why would a Novation be required?

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.

What is the criteria for a Novation?

  • The contract must be transferring from one Limited Company to another Limited Company. Limited Companies include LTD, LLP and PLC.
  • There is more than 12 months remaining on the contract.
  • Both companies (existing and new customer) must be solvent.
  • The contract type must remain the same.
  • The current contractual agreement must not be in default.
  • The address on the documentation for both existing and new customer must match the address on Companies House.
  • Two signatures (2 Directors or 1 Director and 1 Company Secretary) from each company will be required.
  • The new customer must have been credit approved before a Novation is requested.

Can anyone request a Novation quotation?

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:

  • The vehicle has less than 12 months to run on the contract.
  • The vehicle is in an extension
  • The vehicle has outstanding debt
  • The Novation agreement has not been completed in full.
  • The customer goes into liquidation or administration while the process is being carried out. If this happens the Novation will be cancelled and the information passed to the finance provider's collection team.

For Insolvency Novations, please contact Nationwide Vehicle Contracts on 0345 811 9595 to discuss.

How much does a Novation cost?

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:

  • £200 (exc VAT) of which is paid to the finance provider for the administration of the Novation agreement.
  • £200 (exc VAT) of which represents the costs incurred by Nationwide Vehicle Contracts for processing the arrangement on your behalf.

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.

I want to request a Novation quotation, what do I do?

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.

To request a Novation quotation

  1. 1 Contact Nationwide Vehicle Contracts

    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.

  2. 2 Contact Funder

    We will contact the funder to see if you are eligible for a Novation and will be in touch to advise accordingly.

  3. 3 Pay Novation Fee

    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. 

  4. 4 Complete Finance Application

    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.

  5. 5 Documentation Sent

    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.

  6. 6 Sign Novation Agreement

    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.

  7. 7 Review Documentation

    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.

  8. 8 Records Updated

    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.

  9. 9 Date Effective

    The Novation will only be effective from the Date that the funder signs the Deeds.

How long will the process take?

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).

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