Getting out of a vehicle lease in the ACT - Pickles and others?

“Has anyone had any experience with Pickles/other novated lease remarketers who can assist?

It may only be an option if desperate or really needing to get out of the lease, which I’m not. It appears they calculate a ‘low value’ and you need to pay the difference between the low value and the lease figure..which you don’t get back.. and if they sell above the lease amount, seems you don’t get that back either? is that right”

Hi Leksolaq,

I discovered this thread in a recent web search. Pickles launched this Novated Lease service back in 2007 and have sold thousands of the Novated vehicles for drivers in your situation. This clearly would not have occurred if our service was as you described. Given the popularity of Novated Leases amongst Canberra based employees, our Pickles Fyshwick site ranks 3rd behind Sydney and Melbourne with respect to Novated vehicles sales.

You are right in suggesting that Pickles does determine an upfront shortfall for drivers of vehicles where the estimated sale value is lower than the payout value. We do this as Pickles pays out the entire payout value for the driver when taking possession of the vehicle. This in turn breaks the lease and removes the REVS/PPSR and provides the eventual new buyer with clear title.

However, as Pickles sell all vehicles on consignment the Novated drivers are reimbursed the unused portion of upfront gap payment once a sale price is established. All vehicles have a Reserve placed on the vehicle at Pickles High Estimate. It is in Pickles best interests to provide drivers with the highest possible sale price as our selling fee is percentage based and therefore the higher the vehicle selling price, the more commission Pickles earn and the high amount of the gap we return back to the driver. As you can see a win/win for both parties. Furthermore, if Pickles has over valued the vehicle in the first place, Pickles absorbs 100% of the loss should we not be able to achieve the low sight unseen estimate we initially provided.

With respect to vehicles where the expected sale price is greater than the payout value, there is no requirement for any payment upfront and a profit share fee structure with a cap on Pickles earnings is in place to ensure we maximise the drivers net revenue. Again Pickles take risk in this transaction and stand by the estimates provided, absorbing all losses incurred should Pickles not be able to achieve the payout value.

I hope the above explains how Pickles Novated Remarketing service works and the confidence with which our clients transact with us. All of the areas I mentioned above that Pickles take risk are clearly documented in the agreements executed by both parties prior to vehicle receipt. However if you had any further questions I’d encourage you to visit our website again and call our 1300 number or email my team with your questions and we will be only too happy to help you.

With regards to the private sale of a Novated leased vehicle, it is my understanding that the financier would require direct payment from the buyer in cleared funds and there should be payment instructions on your payout letter. If your agreed sale price does not meet the payout value, can I suggest you pay the financier the shortfall prior to the buyers payment. Once your payment has been made, a revised payout letter can be obtained leaving the sale price outstanding for the buyer to pay. This should provide your buyer with a much great comfort level and the REVS/PPSR will be extinguished by the financier upon payment by the buyer leaving the vehicle with a clear title.

Regards,

Brendon

We recently bought a 3 year old vehicle that was leased by the previous owner. We leased it through my employer’s salary sacrifice company, they handled most of the paperwork for us and it was very little hassle.

Basically I negotiated the price with the seller, he spoke to his finance company and got a payout figure that was current until a particular date. I provided the details of that payout figure to my salary packaging company who arranged for the payout figure to be transferred to the sellers finance company. Post that there was a small additional amount that was transferred to the seller. No issues at all, was easier than getting a suitcase full of cash or a bank cheque.

Breaking a lease like this is a regular occurence, I use to do it often in a previous job, you simply speak to the finance company, find out the payout figure and go from there. Purchasers should not have a problem with the emcumberence as long as you are up front with it and they don’t find out through doing a REVS check.

I would say selling a car like this is quite common in a place like Canberra where alot of people have vehicles on Salary Packaged Arrangements.

Good luck.

harvyk1 said :

JC said :

so if the leasing company found out you would maybe find yourself in the lock-up.

You wouldn’t find yourself in the lock up. You would however find yourself liable for any lease payments missed by the 3rd party, and you would also be liable for any fines incurred by the 3rd party. So if the third party ran a red light (and then didn’t pay the fine) you’d receive the summons to court, not them. If they stopped paying the lease, you’d be the one with debt collectors on your door, and you’d again be the one who will be legally forced to pay up, and you’d probably have buckleys in taking the 3rd party to court to recover costs.

The best thing to do is call your leasing company and ask about any sort of early payout amounts. Once you have done that sell the car, advising the buyer than there is an encumbrance over the car, let them know who to contact and pay to clear the encumbrance. They pay out the leasing company plus any break costs (that way they know it’s done and thus don’t lose the car if you run off to South America without giving any money to the leasing co) and then any additional amount which forms part of the cars sale price to yourself.

Noo… I’m not ‘transferring’ the lease. I want to find a buyer, pay it out.. then sell the car. But I don’t want to pay it out til I know I have a buyer..

dungfungus said :

Lease agreements do not have provision for assignment to third parties. Non regulated hire-purchase agreements generally do. In any case, the titled owner must be consulted and it is in the assignor’s interests to be released from all liabilities inder the initial agreement anyhow.
Absolute title to to the vehicle will be in the lessor’s name until that party advises the Registrar of Encumbered Vehicles (REVS) that they have no further interest in the vehicle. If negotiations between the lessee and a prospective purchaser develop it imperative that the “payout” figure owing to the leasing company be confirmed and the purchaser pay this amount direct to the leasing company who is the only party that can legally transfer title.

dungfungus said :

Lease agreements do not have provision for assignment to third parties. Non regulated hire-purchase agreements generally do. In any case, the titled owner must be consulted and it is in the assignor’s interests to be released from all liabilities inder the initial agreement anyhow.
Absolute title to to the vehicle will be in the lessor’s name until that party advises the Registrar of Encumbered Vehicles (REVS) that they have no further interest in the vehicle. If negotiations between the lessee and a prospective purchaser develop it imperative that the “payout” figure owing to the leasing company be confirmed and the purchaser pay this amount direct to the leasing company who is the only party that can legally transfer title.

Yep, thanks for the clarity.

This is my plan.

I wanted to know who has experienced it, when the amount to pay the leasing company is LESS than the price negotiated for the vehicle.

I am thinking it is better for them to deposit all of it with the leasing company, and get the extra back at reconciliation? I don’t have my extra for a little while, but it is neater and easier to do it legally that way, I can wait a few weeks for the extra to come back.

“The best thing to do is call your leasing company and ask about any sort of early payout amounts. Once you have done that sell the car, advising the buyer than there is an encumbrance over the car, let them know who to contact and pay to clear the encumbrance. They pay out the leasing company plus any break costs (that way they know it’s done and thus don’t lose the car if you run off to South America without giving any money to the leasing co) and then any additional amount which forms part of the cars sale price to yourself.”

Yes, of course. This is what I was talking about doing.

I have the pay out figure. The registration is in my name. However, technically I can’t take any money for it until I pay out the lease. That said, once the deposit is made into the bank account it processes in 48 hours and they no longer claim the encumbrance.

So I am wondering if anyone would pay for it and trust me to immediately make the deposit. I know someone who has sold their vehicle like this before. Takes quite a bit of trust I guess.

Otherwise, I need to take a deposit from the buyer, pay it out and then take their payment which is a bit messy.

I wanted to know if anyone has the experience of asking the buyer to pay directly into the lease account.

Problem with that is if you sell it for more than what is owed on the lease, which I am likely to do, it becomes a bit messy again.

I can’t transfer rego until I know its paid but… really.. which necessitates them coming back.

Unless they make a cheque out to the leasing company (bank cheque obviously)

Lease agreements do not have provision for assignment to third parties. Non regulated hire-purchase agreements generally do. In any case, the titled owner must be consulted and it is in the assignor’s interests to be released from all liabilities inder the initial agreement anyhow.
Absolute title to to the vehicle will be in the lessor’s name until that party advises the Registrar of Encumbered Vehicles (REVS) that they have no further interest in the vehicle. If negotiations between the lessee and a prospective purchaser develop it imperative that the “payout” figure owing to the leasing company be confirmed and the purchaser pay this amount direct to the leasing company who is the only party that can legally transfer title.

harvyk1 said :

JC said :

so if the leasing company found out you would maybe find yourself in the lock-up.

You wouldn’t find yourself in the lock up. You would however find yourself liable for any lease payments missed by the 3rd party, and you would also be liable for any fines incurred by the 3rd party. So if the third party ran a red light (and then didn’t pay the fine) you’d receive the summons to court, not them. If they stopped paying the lease, you’d be the one with debt collectors on your door, and you’d again be the one who will be legally forced to pay up, and you’d probably have buckleys in taking the 3rd party to court to recover costs.

Sorry if you sell something you don’t own then you have commit fraud at best and possibly theft. Both could see you in jail. Just because the rego papers are in some case in the name of the lessee doesn’t mean you own the vehicle. That is what the OP was suggesting, whereas you seem to be suggesting a sub lease type arrangement.

But yes do agree that the OP contacts their company to see what ALL the options are.

JC said :

so if the leasing company found out you would maybe find yourself in the lock-up.

You wouldn’t find yourself in the lock up. You would however find yourself liable for any lease payments missed by the 3rd party, and you would also be liable for any fines incurred by the 3rd party. So if the third party ran a red light (and then didn’t pay the fine) you’d receive the summons to court, not them. If they stopped paying the lease, you’d be the one with debt collectors on your door, and you’d again be the one who will be legally forced to pay up, and you’d probably have buckleys in taking the 3rd party to court to recover costs.

The best thing to do is call your leasing company and ask about any sort of early payout amounts. Once you have done that sell the car, advising the buyer than there is an encumbrance over the car, let them know who to contact and pay to clear the encumbrance. They pay out the leasing company plus any break costs (that way they know it’s done and thus don’t lose the car if you run off to South America without giving any money to the leasing co) and then any additional amount which forms part of the cars sale price to yourself.

It all depends upon the lease.

With my last lease I cancelled it 6 months early and made a profit out of it. The deal was I had to buy the car for the pro-rata depreciation rate, plus a smallish early break fee (think it was just their management fee*6 months). In was then able to sell the car and made $4k out of it.

Alternatively I could have paid the break fee and given them the car to sell, but as you point out if they sell for more than their book value you get nothing and if they sell for less you need to pay the difference.

As for buying a leased car and taking over the payments, anyone who considered buying one would have to have rocks in their head and anyone doing that would be related to dogey brothers. Besides you cannot technically transfer the rego or sell it because the car isn’t yours, so if the leasing company found out you would maybe find yourself in the lock-up.