Volkswagen Financial Services directors indemnity

[Mike_S]

Hi,
I haven’t signed this yet but they have sent it with a Business contract hire agreement. My company is established since 2012. They have already credit checked me personally. Is this reasonable of them? Has anybody had luck declining indemnities on hire agreements? It says the agreement will show on my credit report and now I’m thinking I’m not that desperate for the van.

[R0b]

Re: Volkswagen Financial Services directors indemnity

Of course it is reasonable and quite common, assuming you consented to them credit checking you. They are managing the risk by getting you to indemnify them of any outstanding balance not paid if your business does not pay (assuming it is a limited company?). If you don't wish to be held liable either negotiate the point or if not, walk away from the deal and look elsewhere.

[Mike_S]

Re: Volkswagen Financial Services directors indemnity

They did not ask for my permission to credit check me which I'm not happy about but I feel stupid for not expecting this when they said they were getting me “approved”. They say the van is already on its way and I’ve got signed anything yet. Whole thing has been very hasty. I don’t feel I have been pressured into it though. Going to send the contract back all signed apart from the indemnity and go from there. It does say that I should seek independent professional legal advice before signing the indemnity and it needs a witness so they shouldn’t be too surprised. What if they go bust and I don’t get a van? I haven’t indemnified them. I’m happy to renegotiate with no indemnity or walk away. Thanks.

[R0b]

Re: Volkswagen Financial Services directors indemnity

You may wish to be careful about signing documents but not the indemnity, it could be construed as suggesting that you accepted the indemnity too. I think you need to be keeping a paper trail of your correspondence and keep it in writing, you should particularly highlight that you are prepared to accept the terms and conditions but will not agree to personally indemnifying the business/lender under the agreement.

If they don't agree to remove the indemnity then it is up to you to decide whether you want to proceed on that basis but it sounds like you are giving a personal guarantee. The reason why it says you need to seek independent legal advice is on the back of a court case relating to a mortgage repossession where the wife alleged to have been unduly influenced by the husband. The court said that they should have got independent legal advice prior to signing so they both understood the legal risks hence why that wording is now included.

[Amethyst]

Re: Volkswagen Financial Services directors indemnity

They have to say to seek independent professional legal advice for a reason, and you should do that, or walk away and do your research in advance. They should have discussed the indemnity requirement and personal credit check with you in advance. I really wouldn't send back the signed agreement without the indemnity - I'd get in touch with them for an explanation and then take legal advice. They can take delivery of the van they say is on the way and wait for you to check over the contracts properly.

[Mike_S]

Re: Volkswagen Financial Services directors indemnity

They haven’t asked my wife to sign it? It is an indemnity rather than a personal guarantee on the paperwork. I can’t sign the indemnity page anyway as it will go on the credit report it says and i’m in the process of a mortgage application. I will e-mail then now and explain. Rather than send it back with something not signed. Thanks.

[R0b]

Re: Volkswagen Financial Services directors indemnity

They haven’t asked my wife to sign it?

I think you missed my point, there has been a husband and wife case where the court said both should have obtained independent legal advice before signing the mortgage. That is why you now see on these types of agreements from lenders stating that you confirm that you have sought independent legal advice and have the solicitor either write to the lender or sign the document confirming you have received advice on the risks of personally guaranteeing/indemnifying the lender.

I think your suggestion to write to them in the first instance is a good starting point. You may want to also explore other options in the meantime where there is no personal legal consequences.

[Mike_S]

Re: Volkswagen Financial Services directors indemnity

Thanks yes, I’ll shop around. Maybe other manufacturer’s won’t ask for it or even a bank loan but I doubt that as I’m a small company. I wasn’t expecting this with a contract hire to be honest.

[Mike_S]

Re: Volkswagen Financial Services directors indemnity

Done, balls in their court now. I can quite happily walk away. I already have a van, it’s just old and tired but I’m in no rush.
I told them that I was happy with everything but not sure about the indemnity, that i need to seek legal advice and that I wasn’t expecting this either but I do understand they sometimes ask for it. “Indemnities may be required” their advert says but I’m hoping I can negotiate out of that.

[Mike_S]

Re: Volkswagen Financial Services directors indemnity

So the salesman was very helpful and got an answer from the underwriters on why they need an indemnity from myself and it is because of the value of my company in relation to the value of the agreement. Fair enough. So I have just e-mailed them an offer of 6 months rental up front and no director personal indemnity. The advertised offer was £1000 deposit from VW and zero customer deposit. The rentals are £300 plus vat X 36. I think I've been fair there and addressed some of their concern without waivering my rights and entering a personal contract with them that I didn't approach them for.