A novation is the transfer of a vehicle's non-regulated agreement from one legal entity to another legal entity.
Request a Novation to transfer your lease agreement
A Novation is the official term for transferring your lease agreement from one party to another. The new hirer takes over the existing contract with no amendments, although they may be able to amend the term or mileage after the Novation has been completed.
You might need to request a novation when a business is acquired, merged, or is in insolvency. However, agreements can only be transferred to and from any public/private limited or unlimited company, or large partnership.
To Novate your Alphabet vehicle, the agreement must have at least 6 months left on it, and all payments must be up-to-date. There is also a fee of £250 for the first vehicle (plus £25 for each additional vehicle on the request.) These charges are subject to VAT.
Speak to our expert team about requesting a novation
Novation Process
- At least 6 months remaining on existing contract
- Any arrears must be paid
- Novation request form completed
- Accounts to be provided for the new proposed hirer
- Data Processing Agreement form signed by ‘new hirer’ -Director
- Further documentation or information may be requested as required
- Novation is approved or declined
- Novation agreement to be signed and completed
- Direct Debit Mandate to be completed with the new company details
- Valid motor insurance for the new hirer needs to be submitted to Alphabet
- Management will complete final checks and counter-sign the agreement
- The new company account is then set up
- Vehicle(s) are transferred over to the new account
- Invoice(s) will be raised for the Novation
- Alphabet to confirm completion & provide the completed agreement & new hirer account code
*Important: The ‘old hirer’ is responsible for all invoices issued until this point.
Frequently Asked Questions
The following reasons may result in the need for a novation, but not limited to:
- Merger or acquisition of businesses
- Our existing hirer is in insolvency
Alphabet cannot consider novation of a vehicle from an entity that is dissolved.
Consideration of novation from a business that is in insolvency is subject to approval from Alphabets Recoveries team.
Eligible:
- Any Public/Private Limited or Unlimited company
- Large Partnership (4+ Partners)
Not eligible:
- Private Individual
- Sole Trader
- Small Partnership (3 or less partners)
- 1 vehicle = £250 +VAT
- £25 +VAT for each vehicle in addition to the above
Please note: there is no limit to the number of vehicle's Alphabet can novate
Alphabet require the latest full set of accounts, or in the case of a new business, an opening balance sheet.
The full set of accounts/opening balance sheet must detail the profit & loss and the assets & liabilities of the proposed new hirer.
Alphabet will not be able to review a novation request without financial information having been provided.
Bank statements will not be accepted in place of either of the above; Alphabet will accept bank statements as supporting evidence only.
The financial information provided is to assist our Credit Management team when completing the required credit checks. Alphabet need to ensure that we are a responsible lender; we therefore need a full understanding of the current financial position of the proposed new hirer.
Alphabet require the full name, date of birth and home address of a listed director of the proposed new hirer to carry out fraud prevention and credit checks. This is necessary to assist Alphabet's decision to offer finance. This information will be used if a Directors Guarantee is required to support the novation. Further information is outlined on the DPA form.
As the entity is converting from a Partnership to a Company, a new legal entity will be formed. For the LTD Company to take ownership of the agreement, Alphabet will be required to enter into an agreement with the new entity.
The Novation turnaround time can range depending on the case, and documents requested/received. If we receive the requested documents quickly, it will lead to a faster completion time.
On average, a Novatian will take between 8 - 10 weeks. Please note: this is calculated from the date that all required documents are received by Alphabet.