The last few months have certainly brought some major challenges and changes across the UK. Almost every industry has needed to make adjustments to working practices and standards; the contract hire and leasing industry is certainly no different.
What customers need to appreciate is that everything we do is “financial” meaning that we operate under a regulator (the FCA), a suite of finance companies (Lex, Hitachi, LeasePlan, Alphabet) and an ombudsman (the BVRLA).
Add to that a number of other legal obligations and you can quickly see that there is really no room for flexibility and everything we do must Treat Customers Fairly.
With the current economic situation making changes to our personal and business customers, some of this does need to be communicated to us, as the broker, in order to properly inform the finance companies we work with.
Leasing a “subject to status” financial product, meaning that every customer must go through some form of credit check/financial underwrite before they are able to proceed.
Not everyone is automatically accepted and in the current environment we need even more information from our customers to allow informed decisions to be reached.
Can I get a lease car while I’m on Furlough?
Moving forward we are looking to get more information for our customers before we send the proposal to the finance company. This is about providing us with factual accuracy and letting us know if you are on Furlough/using payment holidays on current vehicles.
As part of your application, please can you confirm the below:
- please confirm the proposal you have completed is correct and accurate – our guide to completing the proposal form is available upon request;
- please can you confirm whether or not you are furloughed – if yes, we need to inform the finance company;
- please confirm that you are able to pay for the vehicle regardless of any Coivd-19 restrictions which affect your current employment; and
- please confirm whether or not you have not arranged a payment holiday / payment plan / moratorium of payment with your existing car/van finance provider.
With a substantial volume of the UK’s population having either experienced Furlough or are still on Furlough, we need to make sure this is noted on our applications to the finance companies.
But does this mean I will be rejected? In short, no. The fact you are on this scheme is not going to preclude you from accessing our leasing deals but it is somewhat relevant.
When we send a credit application to a customer, they are also asked to review our “Guide to Proposal Forms ” which will go into detail about a number of key facts including affordability (ability to pay) and credit (willingness to pay).
The evident fact is that for some customer’s their ability to pay in the short/medium term has been affected due to Covid-19. Of course, there are obvious cost-savings for some customers who are no longer travelling to and from work but this is why we do an income/expenditure assessment to take this into account.
If a customer is on a Furlough scheme, some finance companies are asking that this be their annual income moving forwards. The Coronavirus Job Retention Scheme (CJRS) which pays retained workers 80% of their income should be noted as follows:
- Calculate 80% of the customer’s February income before tax. This can be up to a maximum of £2500 per month;
- If the customer’s employer is contributing to their income on top of the furlough payment, add this to the calculation; and
- This monthly figure can then be used to work out their current annual income.
For small self-employed businesses, If customers are eligible for a grant through the Self Employment Income Support Scheme (SEISS) their income should be noted as follows:
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- For applications made prior to August 2020: Customers should calculate 80% of their average annual trading profit over the last 3 tax years. This can be up to a maximum of £2500 per month;
- For applications made from August 2020 onwards: Customers should calculate 70% of their average annual trading profit over the last 3 years. This can be up to a maximum of £2190 per month;
- If the customer’s business is currently generating income for the customer, even at a reduced amount, then this should be included in the calculation too; and
- This monthly figure can then be used to work out their current annual income.
If customers are working reduced hours or have opted for a temporary reduction in their pay, they should confirm what they think their lowest annual income could be before tax.
Can I get a lease car if I have a payment holiday?
If a customer has been utilising the flexibility of the finance company for their existing vehicle in the form of a payment holiday, this may negatively affect their ability to obtain a vehicle.
If a customer is currently serving a ‘deferral period’ (I.e. a period of grace that involves either reduced payments or no payments being made at all on a current credit arrangement) to any funder then they will have only been granted this form of forbearance as they have declared severely reduced income to that funder.
If the customer’s income has been so badly impacted that they have had to request this form or forbearance, then they should not be actively seeking new credit facilities at this time. Many finance companies are asking that we only propose customers to them that are not serving a period of non-payment with any funder.
If you are on a payment holiday, you do need to understand from your finance company when their amount needs to be repaid by (and how). Or, should this be applicable, how long will your contract be extended by?
We appreciate some customers are not using vehicles during lockdown but this does not entitle you to a rebate or payment reduction.
Delivering a new lease car to our client during Covid
Moving on to one of our “Covid-19 Deliveries”, our Scotland-based key worker took delivery of her new Ford Puma! In term of the model shown, the Ford PUMA HATCHBACK 1.0 EcoBoost Titanium 5dr (Petrol Manual), this is based on the following configuration: 
- Premium paint – Agate Black
- Alhambra cloth with casual bolsters – Ebony black
- 17″ 10 spoke absolute black machined finish alloy wheel
As standard the car includes quickclear heated windscreen, ESC, pre-collision assist, lane keeping aid with departure, rear parking sensor, wireless charging pad, power foldable heated door mirrors with puddle lamps.
Front fog lights, Thatcham cat 1 alarm, 17” alloys, automatic headlights, cruise control, projector headlamp and Ford SYNC 3 navigation. For a bit more “sport” upgrade to the St Line or St Line X.
On the technical-side, company car and business drivers can note the CO2 at 132g/km and P11d at £20,915.00. For more eco-car leasing type customer consider the “hybrid” options now being offered by Ford on the Puma.
The 999CC 6-speed manual petrol engine delivers 125ps, 62.8 combined MPG and 0-62 times of 10 seconds. Service intervals are set at every 24 months or every 18,000 miles.
See our latest Ford Puma leasing offers here
