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PLEASE HELP - Mis-Sold, Mis-Led on Car Finance, ANY IDEAS WELCOME?

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Can anyone help me?


I purchased an Audi A4 Cabriolet in 2006 from an Audi Dealer in the Midlands. I was told by the Sales Exec and the Financial Controller that I was entering into a PCP whereby I could give the car back after 35 months or pay the balloon payment of £16,000 and own the car.


Low and behold I went to return the car today only to be told that I had signed a Lease Purchase Agreement as opposed to the PCP I thought and had been told I was signing.


I am not an expert in finance and financial papers, and with hindsight I should have checked the paper work, however I have been a victim of sales tactics here.


I have written a complaint to both Audi dealer and the VWFS who provided the finance. So far I have had the usual, we have recieved your letter and will respond in writing, response..


Bottom line is I have signed this contract, I have seen my signature on it, but this is not what I believed the contract to be nor was I told I wouldnt be allowed the to hand the car back, I was told would be able to do this?


I do not want the car and do not want to pay for it?


Anybody been in this position before and able to offer any advice?


Many thanks



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Hi Mark


First step is to understand the difference between a PCP and a LAP......


What is lease purchase?


Broadly lease purchase is the same as PCP in that the leasing company has a retail value of the car and works out an estimated future value of the vehicle for the end of the contractual period based on its depreciation. This is known as the residual value. You can place a lump sum down-payment on the car upfront and then you make monthly payments on the difference between the retail value and the residual value. As a consequence, the more the vehicle ‘holds its value’, the better the deal – meaning luxury cars are often popular for lease purchase deals.

However, there is a fundamental difference between lease purchase and PCP. Whereas PCP gives you the option to buy the car outright at the end of the contractual period, with lease purchase you already have an agreement to buy the car. There is no return option.

Therefore at the end of the lease period, the customer must make a final balloon payment. This may be done through a cash payment or alternatively with additional finance or a part-exchange.


A typical lease purchase agreement will last from two-four years, though with most companies it is possible to settle the agreement at any point during this period.

What are the pros and cons of lease purchase?


You should think carefully before entering into a lease purchase agreement because it is not necessarily the right method of car finance for everyone. Here are its advantages:

  • Luxury/prestige vehicles – Lease purchase is best suited to the finance of high-class vehicles due to the fact that you must take on the residual value. Higher residual values will also result in lower monthly payments.
  • Company asset – Lease purchase is ideal for companies that want to retain the vehicle as an asset.
  • Frees up finance – With lease purchase you take control of a vehicle while still holding money back to put into your company. Initial deposits are only usually the equivalent of three months’ payment.
  • Low monthly payments – Payments are typically cheaper than hire purchase and the same Consumer Credit Act protections apply.
  • Balance sheet – The vehicle can appear as a balance sheet item and you can write down the value against taxable profits.
  • Ownership – Once the balloon payment is made, the vehicle is yours.
  • Maintenance packages – You may be able to negotiate a maintenance package for the duration of the lease purchase agreement.

There are disadvantages to lease purchase too, including:

  • Balloon payment – You must have sufficient finance to afford the balloon payment at the end of the contractual period because it is not optional. In some cases it can be higher than the residual value.
  • VAT not recoverable – You can only reclaim VAT if the car is used exclusively for business use.
  • Ownership risk – The car is yours and thus the effects of depreciation and the costs of maintenance and disposal are all risks throughout the contract.

Who is lease purchase right for?


For private customers, lease purchase is best suited to those who want long finance agreements as this will make your choice of car more affordable. As there is usually no mileage tie-in you can set it at any level depending on how high or low you want the residual value to be.

For businesses, lease purchase requires expert handling. The task of managing a fleet of lease purchase vehicles is not straightforward and you’ll need to scout the market thoroughly for the best deals. You can make it work for your business as long as you research thoroughly.



Then see: Consumer protection :: FLA


see if they can help you further...


Best of luck Mark

[COLOR="red"][B][CENTER]"Errors do not cease to be errors simply because they’re ratified into law.” [/CENTER][/B][/COLOR][B][CENTER] E.A. Bucchianeri[/CENTER][/B]

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  • 2 weeks later...

Hi Mark,

This is exactly what happened to me when I bought from a large BMW dealer 3 years ago. Luckily, I found out before taking possession of the car when the managing director of the dealership rang me asking if I was clear about the agreement I had entered into. It turned out that the salesman was fraudulently signing up customers to lease purchase agreements rather than PCPs. Why? - They told me that (dishonest) salesmen make more commission that way. The upshot was that the rogue salesman got sacked, my agreement was changed to a PCP, and I received a case of wine for my troubles.

Unless you are already very familiar with the contract paperwork, it is extremely difficult for a customer to know they are NOT actually signing up to a PCP when the sales guy is sitting there saying you are! I was told the one above had tricked a large amount of customers this way so it is obviously fairly easy to do.

Bearing in mind that it is the responsibility of the dealer to issue the correct agreement, you should stand your ground and assert that you were misled into entering a contract you did not want. You may find you were not the only one!

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  • 11 months later...

Hi, sorry to hear about your predicament. Unfortunately you are not alone, this is quite a widespread problem- the issue came about because lease purchase agreements had some flexibilty within the balloon payment, which meant a business manager ( finance guy ) could meet a customer's monthly budget without affecting his rate spread ( commission ). In practice, the customre got almost all the benefits of a PCP, over HP, all except the Guarantee.

As Used car values were fairly stable, and lending was free and easy, they could always dig the customer out and into a new agreement, often early, and everyone was happy. Unfortunately, the market has been turned on its head, used car values are nowhere near what was forecast, and rates and terms are completely different. In the majority of finance agreements, the manufacturers and finance companies took massive losses through people handing back at the end of the agreement.

You will need to persevere with this, and I would suggest you tackle the dealer, as well as Audi UK, and VWFS. You won't be the only one to be complaining, and I wouldn't be surprised if VWFS haven't got a little fund set aside for this - the manufacturer I used to work for did, as Goodwill.

The dealer has a duty to explain your finance agreement to you, and if they have misled you, hey have broken the law. Consider contacting the FSA and FOS if you are having no joy. Basically, it will boil down to whether or not the dealer is prepared to stand up and testify that your agreement was fully explained to you.

In my experience, they will settle rather than go to court - it's cheaper!

Best of luck!

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  • 9 months later...

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