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Lenders wrestle with rebates

Federation laments lack of consultation from government and the short notice given for new approach.
Posted on 29 June, 2021
Lenders wrestle with rebates

Finance companies are grappling with how to ensure they don’t dip out when providing loans or leasing arrangements to customers choosing cars entitled to rebates.

The Financial Services Federation (FSF) and its members were taken by surprise when the government gave less than three weeks’ notice of plans to offer money back on BEVs and PHEVs from July 1.

Lyn McMorran, executive director, says most vehicles on our roads are financed by companies that are FSF members, but the government failed to consult prior to the clean-car announcement.

She adds fleet-leasing providers work with “government, large corporates – a lot of the people likely to want to bring in EVs”, but risk losing out because of the discounts.

“The registered owner is usually the company or the person driving the vehicle,” says McMorran, pictured. “While the legal owner might be the leasing company, its first registration is in the name of the person who has leased it. 

“The leasing company that owns the car legally wouldn’t qualify for the rebate. It would pay $60,000 for a Nissan Leaf, for example, but the $8,000 refund would go to whoever is driving it.

“The problem for the leasing company is what’s that vehicle is worth. It’s no longer worth what it paid for it. It has depreciated by $8,000 from the minute it was registered.

“When it’s brought back, assuming that’s fairly early on in the leasing, it is probably not worth what they’ve paid for it.”

She says finance companies providing consumers loans for 100 per cent of a car’s cost have similar concerns. 

“They have a $60,000 vehicle with a $60,000 loan against it, but the consumer gets the $8,000 so it’s now only worth $52,000.”

McMorran adds members have raised issues about rebates and that the FSF has been frantically trying to get to grips with how the system will work.

There was also an initial lack of clarity about who to talk to in government with the Ministry of Transport appearing to be the lead agency for the scheme, but Waka Kotahi handling the rebates.

“You would think they would have done the logistical work before making the announcement,” says McMorran. “We had no notice whatsoever. It’s caught everyone blindsided.

“We’re still trying to get our heads around what potential fishhooks are for people who ultimately finance most of the EVs that will to come into the country.

“We have got to sort out what the actual issues are and come up with solutions. The officials haven’t thought about how this is going to affect leasing and finance companies providing access to these vehicles.”