Volvo early termination & MSD Refund

Ask the Hackrs
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1

I’m hoping for some help / clarity for those who recently executed an early termination with VCFS AND who had Security deposits. Did you get the security deposits back? I recently requested an early termination quote through the VCFS messaging portal. They responded back with a letter showing $0 cost (with no breakdown), and that I could turn it in within a week. For context, I have a 2025 XC60 T8 Plus with 21k miles and 4 payments left ($338 base monthly + $30 monthly tax), and the MSD on the contract is $4,000.

Before turning it into the dealer, I called VCFS to confirm I would still get my MSD back. After having to call me back an hour later, the customer care rep said that the MSDs were incorporated as part of the quote, and that two of their managers advised that I would NOT get it back. I pushed for a full breakdown, but they said it is not available since it totals $0. They referenced an internal breakdown which they could not show me (after me asking multiple times), but they did let it slip that the wholesale value they used was $45,500. Otherwise, the only thing they could tell me was that the quote uses a lot of variables to determine the value, and that I can refer to the contract. I am surprised for a couple reasons:

  1. It would be negligent for VCFS not to disclose on the termination quote that I would be forfeiting the MSDs
  2. It seems overly convenient for the quote to net out at exactly $0 if they had to use all of the security deposits. (i.e. I would’ve owed exactly 4,000 if I hadn’t had security deposits?)
  3. The wholesale value they referenced was $45,500, and the payoff is $42,xxx. If my math is correct (below), they would’ve needed to assign a realized/wholesale value of ~$36,800 for me to have to use all 4k in security deposits.

Your Standard Early Termination Charge is calculated as follows:

  • (i) the Base Monthly Payment times the number of Monthly Payments not yet made, PLUS
  • (ii) any other amounts unpaid by you, including Late Charges as described in Section 27, other than excess mileage and excessive wear and use charges, arising under this Lease and not prohibited by applicable law, PLUS
  • (iii) any official fees and taxes related to the termination of this Lease, PLUS
  • (iv) the Residual Value, PLUS
  • (v) the Vehicle Turn-in Fee, MINUS(vi) the “Realized Value” of the Vehicle (as specified below), MINUS*
  • (vii) the unearned Rent Charge calculated in accordance with an actuarial method.

With all that said, If I do rough math based on what’s spelled out in the contract, and assuming the $45,500 wholesale value they quoted over the phone is accurate, I find it impossible that they would need to use any of the $4,000 MSD to cover any deficit, let alone all of it, but I’m not sure what I’m missing or what else to tell VCFS.

Ultimately, if they keep telling me I won’t get it back, it seems too risky for me to execute the early termination and instead just pay the remaining 4 payments. However, its frustrating because we made the decision to execute another lease early based on the initial $0 quote

---- My rough math based on contract -----

Item Amount Charge / Credit
Base Monthly Payments Not Yet Made (4 × $338.34) $1,353.36 Charge
Other Unpaid Amounts $0.00 Charge
Official Fees and Taxes $0.00 Charge
Residual Value $41,009.85 Charge
Vehicle Turn-in Fee $450.00 Charge
Total Gross Owed to VCFS $42,813.21
Realized Value of Vehicle (Wholesale) -$45,500.00 Credit
Unearned Rent Charge (Actuarial Estimate) -$144.17 Credit
Calculated Net Balance -$2,830.96
Final Early Termination Quote (Floored at zero) $0.00

*Under this method of determining the unearned Rent Charge, the monthly Rent Charges (including those for the month in which the early termination occurs) are earned in advance on the scheduled due dates of your Monthly Payments and your Monthly Payments are deemed to have been received on their scheduled due dates. The “Realized Value” of the Vehicle is, if you obtain (at your expense) a written appraisal of the wholesale value of the Vehicle by a qualified independent appraiser acceptable to us, the appraised wholesale value which shall be final and binding on you and us. Otherwise, the Realized Value shall be the fair wholesale market value of the Vehicle at termination according to a recognized used vehicle guide selected by us and customarily used by motor vehicle dealers, including, but not limited to, Manheim Market Report, calculated and adjusted, taking into consideration the Vehicle’s mileage and, if applicable, the Vehicle’s physical condition. YOU DO NOT OWN THE VEHICLE. You may not sell the Vehicle to establish a Realized Value for the Vehicle.

2

message me your VIN

3

Try getting a quote from CarMax or Carvana to check the accuracy of the VCFS wholesale value. You might also take it to your Volvo dealer and see what they will give you for it. You might have some equity.

4

Nobody can buy out a Volvo lease before disposition except the first party (leasee), including a Volvo dealer.

5

MMR is ~45. Dealer gave estimate of >43. As mentioned above, dealer can’t buy it directly without me getting another Volvo. In any case, these directional estimates validate the improbability that they would need to factor in the 4k MSD.

6

If you post the first two pages of your lease contract (personal info redacted) as well as the early termination section in its ENTIRETY, I will perform all the calculations (including an accurate actuarial rate calculation) to determine the adjusted lease balance, early termination liability, and buyout amount. You omitted a few important details such as the sales tax rate (9.00%?), money factor, adjusted capitalized cost and the term of your lease. Of course, your lease contract would tell me everything I need to know.

Early term charges and MSD’s should be separate and distinct transactions. One has nothing to do with the other unless the MSD’s are credited against any early term balance owed. However, that is inappropriate IMO.

Also, you may have equity. If so, you may be better off by trading your Volvo if you plan on leasing another vehicle.

PM me if you like.

7

lease contract.pdf (8.1 MB)

@delta737h Sure, go ahead. Though, I think you’ll arrive at the same conclusion, even if my estimates are directional.

Yes, this is what they’re implying when I call (that the MSDs was used as part of the calculation to arrive at $0 owed in their early lease quote)

There is a bit of equity, yes. However, Volvo doesn’t allow 3P Buyouts, and even volvo dealers cannot buy your car directly without getting another volvo as part of the transaction. We decided to get another vehicle (Optiq). My only option would be to buy myself from VCFS, pay tax, wait for the title, and then sell. However, there is not enough equity to cover tax, nor do I want to risk waiting months for a title.

Edit: The most frustrating part is that volvo will not provide an itemized breakdown. If so, I could see how they are arriving at $0 and whether they are in fact somehow leveraging the MSDs, I just do not see how that is possible given buyout amount vs wholesale value. Here is an example breakdown from another post as an example only I pushed hard for a breakdown, but they refused to give to me:

image
image1598×1370 289 KB

8

Yes, that sucks.

But then again, you knew all this up front when you went with a Volvo lease did you not?

9

Yes, of course I knew the restrictions in regards to lease buyouts with 3Ps and dealers. That part isn’t what is frustrating, that is well known. What is frustrating is them showing me a $0 cost early lease termination and not being clear (i.e. breakdown) as to why I won’t get my MSDs back.

10

They are not allowed to keep MSDs. That early term means you get your MSDs back. MSDs are NOT used by VCFS to pay down a car.

11

That is if you do NOT check the box for including MSDs (at least on buyout). I guess there should be some kind of similar form for early termination.

12

Even if they did erroneously include MSDs (which they shouldn’t), there is no way the math works out to having exactly a 4k deficit to cover.

Also, out of curiosity, which checkbox are you referring with regard to payoff?

13

My guess is they just gave their “verbal” estimate, but there should be some kind of official document similar to the buyout request.
On that form they specifically ask if you want MSDs to be used for the payoff.

14

Volvo is looking at the wrong part of the contract. They are charging you the Standard Early Termination fee from 38a.

However, Volvo needs to look at the second paragraph of 38b. That section allows someone who is not in default to bypass the Standard Early Termination Charge and instead pay the remaining payments and all other normal lease return charges.

How you explain this to a customer service agent….that I do not know.

15

I will look later at the diff between the two sections, but even if they use 38a, it still wouldn’t make sense given all the line items that go into the calculation.

16

You’re going to find that opinions in this thread are like assholes. Everyone has one. I already told you what to do with this. There’s nothing more to do, nothing less.

17

Oh, I believe you. I’ve called 4 times yesterday, asked for managers, they all gave same answer: they claim MSDs were used as part of the $0 quote, and they refuse to give a breakdown. So just figuring out how to escalate / who else to ask for.

18

What I’ve learned with Volvo over the years is that it’s useless to call them and speak with different people in different departments and in different positions. You will never get the correct answer. But if you let the process to complete, everything is calculated correctly in the end. I had PPT payments applied incorrectly and also asked about prorated PPT refunds, and never got correct answers. But have received the checks for correct prorated amounts in the mail within couple of weeks.

19

Got it. So what you and Mike are saying is just return it, and I will get it back despite what they tell me.

20

I agree with this. The customer service agents just are not smart enough or empowered enough to figure all the math out. But there are a lot of laws and financial rules that have to be followed and in the end Volvo will follow them.

I will say the contract provides two different ways to return the car early and I would want to know which one I am using. I agree that Volvo will, in the end, process the return correctly. But they will process it correctly based on the early return method selected rather than whatever is better for you.