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Although now operating as a Contract Hire Broker, I ran Contract Hire (Operating Lease) companies for a total of 11 years and can state that I never once had to charge a client any excess charges if they had written off their car. ORB please note!
I would take over the negotiation of the pay-out from the Insurance Company, with the client being informed of progress, and never once failed to obtain sufficient settlement to settle the outstanding value of the car to us. Customer retention guaranteed!
This was mainly due to the fact that we had reclaimed the VAT on the purchase price of the car and Insurance proceeeds are deemed to be "Compensation" and thus not attracting a VAT deduction from the net cash received. We invoiced the sale of the scrap at nominal true scrap value incurring little input VAT.
All Contract Hire companies utilise this method and are, therefore, in a much better position than PCP or HP lenders who do noy have this advantage in the event of a total loss. Perhaps the title of ORB's original post should be changed!
Of course some Contract Hire companies adopt utterly draconian Early Termination charges and may still look to capitalise on the client's misfortune and turn it into a windfall profit, but it is, as always, a case of Caveat Emptor. Read the Contract before you sign it. If you find such unfair terms, then GAP cover can be purchased for Contract Hire, but we advise clients to buy on-line where much better value can be obtained. Client satisfaction is worth much more to us than making a quick buck on overpriced insurance products.
Edited by leaseman on 07/02/2017 at 09:27
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