What happens if the finance company goes bust?

You may only have 24 hours to hand back the car to the receivers.

For all of those people that consider leasing a car to be as complicated as buying a steam iron.

Whilst I have given all sorts of warnings about the things that can go wrong people are still being seduced by a low monthly rental then finding themselves before, during and at the end of the agreement £000’s worse off than if they had used a professional providing professional advice and genuine deals.

The latest warning has come from the leasing industry following the collapse of car rental company 1Car1. When they collapsed the first thing that happened was the liquidation of the business which meant that all 15,000 vehicles had to be collected, some on long term rentals with clients, and sold to bring in as much cash as possible to pay off the creditors. Manheim were used to collect vehicles and they believed that virtually all of the vehicles had been recovered within 72 hours of the company calling in the accountants.

Some have suggested that at least two of the top 50 leasing companies are facing bankruptcy, possibly more. Have you considered the consequences of losing your car instantly, the financial and logistical strains that will be placed upon you and either your business or your family? Trust me, I have seen it and it can be catastrophic. One of the signs is the sudden dropping of rates to secure more business. By doing this the lender convinces his backers that the business is growing whilst others are falling back in the hope that the backers will provide an injection of cash to enable the business to continue.

Whilst there are a few funders and banks that are a bit dopey and would believe the statistics showing increased sales, they are not all that daft. As a result I believe that we will quite easily see a few large leasing companies collapse. So again, if you are considering buying a steam iron as well as changing your car I would suggest that you take a few more precautions than simply looking for the lowest price on the Internet.

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