Volkswagen Financial Services (VWFS) provides financing and leasing options for Volkswagen and its affiliated brands. Cancelling your VWFS agreement can be a complex process depending on the type of agreement you have and where you are in the contract term. Here’s a breakdown of what you need to know:
Types of Agreements & Cancellation Options:
Your cancellation options largely depend on whether you have a personal contract purchase (PCP), hire purchase (HP), or lease agreement. Each agreement type has different rules and potential penalties.
- PCP (Personal Contract Purchase): PCP agreements offer some flexibility. You can typically voluntarily terminate the agreement once you’ve paid at least 50% of the total amount payable (including deposit, installments, and any option to purchase fee). This is known as “voluntary termination” or VT. If you haven’t reached 50%, you can still terminate, but you’ll need to pay the difference to reach that threshold. You’ll be responsible for returning the vehicle in good condition, accounting for fair wear and tear. Excess mileage charges may also apply.
- HP (Hire Purchase): Similar to PCP, HP agreements allow for voluntary termination once you’ve paid 50% of the total amount payable. The same conditions regarding returning the vehicle and covering any shortfall apply. However, if you’re nearing the end of your HP agreement, you might be better off continuing with the payments, as terminating late in the term may still result in substantial costs.
- Lease Agreements (Personal Contract Hire – PCH): Lease agreements are generally more difficult to terminate early. They are typically for a fixed period and involve higher early termination fees. Cancelling a lease agreement often requires paying a significant portion of the remaining payments, potentially covering the entire lease term. Check your specific lease agreement for the exact terms and conditions regarding early termination.
The Cancellation Process:
Regardless of the agreement type, the first step is to contact VWFS directly. Explain that you wish to cancel your agreement and inquire about the process and potential costs. They will provide you with a settlement figure or a breakdown of the fees involved in terminating the contract. Be prepared to provide your agreement number and vehicle registration details.
Things to Consider Before Cancelling:
- Financial Implications: Carefully review the settlement figure and compare it to the market value of the vehicle (if you own it or have the option to purchase). Terminating early can be costly, and it’s crucial to understand the financial impact.
- Condition of the Vehicle: Ensure the vehicle is in good condition, considering fair wear and tear. Excessive damage will result in additional charges. Review the BVRLA (British Vehicle Rental and Leasing Association) fair wear and tear guide for clarification.
- Alternatives to Cancellation: Explore alternatives such as selling the vehicle privately (if applicable) and using the proceeds to settle the agreement. Another option is to refinance the agreement with another lender. These alternatives might be more financially advantageous than outright cancellation.
Documentation:
Keep copies of all correspondence with VWFS, including your initial agreement, cancellation request, settlement figures, and any inspection reports for the vehicle. This documentation can be valuable in case of any disputes.
Cancelling a VWFS agreement requires careful consideration and understanding of the terms and conditions. Contacting VWFS directly and exploring all options is essential to minimize potential financial losses.
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