PCP finance & contract mileage question?
Discussion
daemon said:
Because you could be seen to be returning a car that is not within the realms of "fair wear and tear".
50K miles a year will cause more than "fair wear and tear".
Once again you are conflating two distinct issues. A contractually agreed mileage and reasonable condition or 'fair wear and tear' are two different things.50K miles a year will cause more than "fair wear and tear".
A vehicle may be returned in excellent condition notwithstanding it is over the contractually specified mileage. In that circumstance the finance company couldn't use their wear and tear provisions to impose charges on you. They could, if specified in the contract, impose charges for exceeding the mileage.
rfoster said:
daemon said:
No. They dont. A VT states under the Consumer Credit Act that once you have paid 50% you have nothing further to pay, subject to keeping the goods in acceptable condition.
Thats a legal right. Then can ASK you for it, but they cant enforce this.
Finance Companies HATE this clause. They are lobbying to have it removed.
These are taken directly from an Alphera Financial Services PCP agreement.Thats a legal right. Then can ASK you for it, but they cant enforce this.
Finance Companies HATE this clause. They are lobbying to have it removed.
Excess mileage charges
If you end this agreement early (see termination): The maximum total mileage will apply pro-rata to the reduced period of hire ad your obligation to pay the excess mileage charge will accrue accordingly immediately prior to termination; if the vehicle's mileage exceeds the maximum total mileage calculated pro rata, you will therefore have to pay the excess mileage charge for each mile covered in excess of the relevant maximum total mileage.
Termination
You can terminate this agreement at any time before your final repayment falls by giving us written notice. You will have to return the vehicle and pay (i) any arrears and any other sums which have become payable under the agreement before termination (including any excess mileage charge), plus (ii)the amount (if any) by which one-half of the total amount payable exceeds the aggregate of the advance payment and repayments you have paid, plus (iii) if you do not return the vehicle in good repair and condition, the sum required to compensate us for this. This will be your maximum liability if you comply with these requirements.
Not wanting to get into a bun fight over this issue, whether a customer can argue with the finance company and win is another matter altogether. But the above is regulated by the consumer act, you'd expect that it's been checked thoroughly to ensure it complies!
That is a Statutory Right. A contractual term cannot compel you to pay in excess of that set in Statute
And heres a thread speaking of an example of BMW Finance's response re: VT and excess miles
http://forums.moneysavingexpert.com/showthread.php...
Post #1 "I therefore asked BMW to Voluntary Terminate my agreement and they emailed paperwork to me this morning. The agreement states; 'As long as you have paid 50% of the total amount owing you will have nothing left to pay'."
Also, Post #13 "For anyone elses future reference, a contractual term cannot compel you to pay in excess of that set in Statute
Therefore, if you have paid in excess of 50% of the total amount due under an agreement, and you give official notice in writing of a Voluntary Termination, they CANNOT charge excess mileage fees, irespective of the contractual terms that may limit mileage.
The only requirement under statute is that the goods are in reasonable condition, which of course would depend on many factors such as age, the condition of the vehicle at time of purchase, etc.
If you are say 30,000 miles over the agreed mileage at the point you have paid 50% of the total due, but the car itself is in good cosmetic condition and has been serviced regularly, I think they would struggle to argue it was not in reasonable condition.
If you Gooogle this you will find lots of examples of people VT'ing with excess mileage and paying no fees."
Edited by daemon on Monday 24th March 13:30
daemon said:
1) That section 99 extract refers to missed payments. If you terminate a contract, you are still liable for missed payments. Simples.
2) Also, payment surcharges are due at the end of contract, not accrued during.
1) No, it does not. It is related to your right to terminate.2) Also, payment surcharges are due at the end of contract, not accrued during.
S99. CCA said:
Right to terminate hire-purchase etc. agreements.
(1)At any time before the final payment by the debtor under a regulated hire-purchase or regulated conditional sale agreement falls due, the debtor shall be entitled to terminate the agreement by giving notice to any person entitled or authorised to receive the sums payable under the agreement.
(2)Termination of an agreement under subsection (1) does not affect any liability under the agreement which has accrued before the termination.
...
2) You are confusing when an obligation accrues and when payment is due.(1)At any time before the final payment by the debtor under a regulated hire-purchase or regulated conditional sale agreement falls due, the debtor shall be entitled to terminate the agreement by giving notice to any person entitled or authorised to receive the sums payable under the agreement.
(2)Termination of an agreement under subsection (1) does not affect any liability under the agreement which has accrued before the termination.
...
10 Pence Short said:
1) No, it does not. It is related to your right to terminate.
You missed my word EXTRACT.The EXTRACT quoted refers to the fact that you cannot expect to miss payments and not have to pay them.
The Section 99 itself refers to your right to terminate.
Edited by daemon on Monday 24th March 13:37
10 Pence Short said:
daemon said:
Because you could be seen to be returning a car that is not within the realms of "fair wear and tear".
50K miles a year will cause more than "fair wear and tear".
Once again you are conflating two distinct issues. A contractually agreed mileage and reasonable condition or 'fair wear and tear' are two different things.50K miles a year will cause more than "fair wear and tear".
A vehicle may be returned in excellent condition notwithstanding it is over the contractually specified mileage. In that circumstance the finance company couldn't use their wear and tear provisions to impose charges on you. They could, if specified in the contract, impose charges for exceeding the mileage.
If you are returning a vehicle at the end of the contract, that would CONTRACTED mileage due.
If you perform a VT under the CCA and have paid more than 50% then they CANNOT claim a CONTRACTED mileage rate, however they could try to recoup some of that by claiming the mileage is outside what would be deemed to be fair Wear and Tear
You know we are talking about a VT return here, right?
Edited by daemon on Monday 24th March 13:35
10 Pence Short said:
S99. CCA said:
Right to terminate hire-purchase etc. agreements.
(1)At any time before the final payment by the debtor under a regulated hire-purchase or regulated conditional sale agreement falls due, the debtor shall be entitled to terminate the agreement by giving notice to any person entitled or authorised to receive the sums payable under the agreement.
(2)Termination of an agreement under subsection (1) does not affect any liability under the agreement which has accrued before the termination.
...
2) You are confusing when an obligation accrues and when payment is due.(1)At any time before the final payment by the debtor under a regulated hire-purchase or regulated conditional sale agreement falls due, the debtor shall be entitled to terminate the agreement by giving notice to any person entitled or authorised to receive the sums payable under the agreement.
(2)Termination of an agreement under subsection (1) does not affect any liability under the agreement which has accrued before the termination.
...
daemon said:
Liability, being an accounting / financial term, not one relating to contracted terms.
Liability has its ordinary meaning. If you accrue more mileage than allowed under the contract you are in breach and would normally have a financial liability for it. That liability would have accrued prior to termination.I would expect that clause is there to protect the hirer from losing out on both missed payments and breaches of contract by the hiree.
Motor Finance Online
http://www.motorfinanceonline.com/comment/a-hidden...
"The company accepted the VT and the car was returned.
However, his return mileage on the car was considerably higher than the pro rata contract mileage. When he received an excess mileage charge relating to the excess, he refused to pay as there was nothing in the Consumer Credit Act that related to the excess mileage charges when VT-ing a hire purchase or conditional sale agreement.
When this was pointed out the lessor, under the threat of having the case referred to the Financial Ombudsman Service, decided to drop the charges."
http://www.motorfinanceonline.com/comment/a-hidden...
"The company accepted the VT and the car was returned.
However, his return mileage on the car was considerably higher than the pro rata contract mileage. When he received an excess mileage charge relating to the excess, he refused to pay as there was nothing in the Consumer Credit Act that related to the excess mileage charges when VT-ing a hire purchase or conditional sale agreement.
When this was pointed out the lessor, under the threat of having the case referred to the Financial Ombudsman Service, decided to drop the charges."
Consumer Action Group
http://www.consumeractiongroup.co.uk/forum/showthr...
Post #10
"My query was based on the wording of the Act, which had been replicated in my contract. It was the part refering to 'nothing further to pay' once 50% of the agreement had been paid, providing the goods had been taken reasonable care of. It was clear that the Finance Company have to cite the Act word for word and did so in isolation of anything else. It is only in their own Terms and Conditions that they refer to Excess Mileage etc and then it is tenuous whether it applies in the case of a VT.
So, long story short, I phoned the company and they asked what my query was. I said that 'As I have invoked my statutory right to voluntarily terminate and the paperwork says in that case I have nothing further to pay, can you explain how you can invoice me for further costs?'
The immediate reply was 'Can you hold for a minute?'
After a minute of waiting and steeling myself for a debate, the chap came back on and simply said, 'Yes, we'll withdraw that invoice. There is nothing further to pay.'
'Is that it?'
'Yes. We will cancel the invoice.'
'Er, Ok. Can I have that in writing then please?'
We didn't even talk about whether or not I wanted to pay it. I was, afterall, just asking them to explain it. So, I now have an e-mail stating 'We confirm that the above account has been closed. The amount of £####.## has been classed as void, due to the terms of your agreement with regards to voluntary terminations.'
All I can think is that Contract cannot overwrite Statute, but I was amazed how simply it was just made void. They very obviously knew where they stood given the speed of the response."
http://www.consumeractiongroup.co.uk/forum/showthr...
Post #10
"My query was based on the wording of the Act, which had been replicated in my contract. It was the part refering to 'nothing further to pay' once 50% of the agreement had been paid, providing the goods had been taken reasonable care of. It was clear that the Finance Company have to cite the Act word for word and did so in isolation of anything else. It is only in their own Terms and Conditions that they refer to Excess Mileage etc and then it is tenuous whether it applies in the case of a VT.
So, long story short, I phoned the company and they asked what my query was. I said that 'As I have invoked my statutory right to voluntarily terminate and the paperwork says in that case I have nothing further to pay, can you explain how you can invoice me for further costs?'
The immediate reply was 'Can you hold for a minute?'
After a minute of waiting and steeling myself for a debate, the chap came back on and simply said, 'Yes, we'll withdraw that invoice. There is nothing further to pay.'
'Is that it?'
'Yes. We will cancel the invoice.'
'Er, Ok. Can I have that in writing then please?'
We didn't even talk about whether or not I wanted to pay it. I was, afterall, just asking them to explain it. So, I now have an e-mail stating 'We confirm that the above account has been closed. The amount of £####.## has been classed as void, due to the terms of your agreement with regards to voluntary terminations.'
All I can think is that Contract cannot overwrite Statute, but I was amazed how simply it was just made void. They very obviously knew where they stood given the speed of the response."
daemon said:
I'm not "relying" on any particular part of it - its a statement of fact.
http://www.legalbeagles.info/forums/showthread.php...
You legally have "nothing more to pay" providing you have taken "reasonable care" of the car. This is generally accepted to be approx 12,000 mile per year and as usually defined by the British Vehicle Rental and Leasing Association, here -
http://www.bvrla.co.uk/service/fair-wear-and-tear-...
I'm confused, are we still talking about handing the car back at any mileage, or 12,000 is around the cap before things starting to get messy?http://www.legalbeagles.info/forums/showthread.php...
You legally have "nothing more to pay" providing you have taken "reasonable care" of the car. This is generally accepted to be approx 12,000 mile per year and as usually defined by the British Vehicle Rental and Leasing Association, here -
http://www.bvrla.co.uk/service/fair-wear-and-tear-...
Most of your posts are very black and white about handing the car back at ANY mileage if you VT, this one no so clear.
jon- said:
daemon said:
I'm not "relying" on any particular part of it - its a statement of fact.
http://www.legalbeagles.info/forums/showthread.php...
You legally have "nothing more to pay" providing you have taken "reasonable care" of the car. This is generally accepted to be approx 12,000 mile per year and as usually defined by the British Vehicle Rental and Leasing Association, here -
http://www.bvrla.co.uk/service/fair-wear-and-tear-...
I'm confused, are we still talking about handing the car back at any mileage, or 12,000 is around the cap before things starting to get messy?http://www.legalbeagles.info/forums/showthread.php...
You legally have "nothing more to pay" providing you have taken "reasonable care" of the car. This is generally accepted to be approx 12,000 mile per year and as usually defined by the British Vehicle Rental and Leasing Association, here -
http://www.bvrla.co.uk/service/fair-wear-and-tear-...
Most of your posts are very black and white about handing the car back at ANY mileage if you VT, this one no so clear.
Ultimately i *think* up to around 15K-20K miles a year, the finance company would struggle to enforce any sort of "wear and tear" charges on a car that had otherwise been well maintained, even IF your contracted PCP miles were say, 6,000 miles a year.
They definitely CANNOT enforce mileage surcharges at the contracted rate. They COULD however say "you have done 25K miles per year, therefore this is not fair wear and tear, therefore we are going to invoice you for £X".
It is very clear that finance companies keep their head down on this and are adapting the approach of not creating a s
t storm as the less people who know about it, means the less people will do it.Edited by daemon on Monday 24th March 14:06
10 Pence Short said:
daemon said:
Liability, being an accounting / financial term, not one relating to contracted terms.
Liability has its ordinary meaning. If you accrue more mileage than allowed under the contract you are in breach and would normally have a financial liability for it. That liability would have accrued prior to termination.I would expect that clause is there to protect the hirer from losing out on both missed payments and breaches of contract by the hiree.
VT under the CCA completely over-rides any contracted agreement. All it states is that the car must be returned in "reasonable condition".
On my reading the confusion comes down to this;
Firstly:
1) Section 99 of the Consumer Credit Act 1974 gives you the right to voluntarily terminate a hire purchase agreement at any time before the final payment is due.
2) Section 100(1) limits the amount you can owe to the hirer upon voluntary termination, to 50% of the total value of the agreement.
The confusion seems to be setting in because people are reading internet stories and not taking into account the full picture between the contract, legislation and each individual circumstance.
Here are two scenarios:
1) You have a car on a 24 month PCP with an agreed mileage of 10k per annum and 10 pence per mile charges over that. You pay £100 per month. The payment schedule means that you have paid 50% of the total payments in 12 months, half way through the agreement period. In that time you have done 15,000 miles.
You VT the car having paid exactly 50% of the agreement. You are 5000 miles over the agreed mileage @ 10p per mile, so owe the finance company £500. They can claim this back from you, as this is a liability accrued prior to termination and is for your breach of contract.
Now, if the timing is a little different...
2) Same scenario as above, but you've made 5 more payments and terminate at the 17 month mark instead of 12 months. As it happens you're still 5000 miles over the agreed mileage limit. Except now, you've paid 50% of your agreement value, plus another 5 monthly payments, meaning you've paid £500 more under the agreement in installments.
In this case, you still owe the hirer for the excess mileage (£500, remember). Except, you've also paid £500 more than statutory amount of 50% owed under the hire agreement when you VT. In which case, the £500 you owe can be offset against the payments you carried on making after the 50% point.
In other words, you're still liable for the excess mileage and will have to make sure the amount you've paid above the 50% is equal to or greater than the total penalty for exceeding the mileage.
Firstly:
1) Section 99 of the Consumer Credit Act 1974 gives you the right to voluntarily terminate a hire purchase agreement at any time before the final payment is due.
2) Section 100(1) limits the amount you can owe to the hirer upon voluntary termination, to 50% of the total value of the agreement.
The confusion seems to be setting in because people are reading internet stories and not taking into account the full picture between the contract, legislation and each individual circumstance.
Here are two scenarios:
1) You have a car on a 24 month PCP with an agreed mileage of 10k per annum and 10 pence per mile charges over that. You pay £100 per month. The payment schedule means that you have paid 50% of the total payments in 12 months, half way through the agreement period. In that time you have done 15,000 miles.
You VT the car having paid exactly 50% of the agreement. You are 5000 miles over the agreed mileage @ 10p per mile, so owe the finance company £500. They can claim this back from you, as this is a liability accrued prior to termination and is for your breach of contract.
Now, if the timing is a little different...
2) Same scenario as above, but you've made 5 more payments and terminate at the 17 month mark instead of 12 months. As it happens you're still 5000 miles over the agreed mileage limit. Except now, you've paid 50% of your agreement value, plus another 5 monthly payments, meaning you've paid £500 more under the agreement in installments.
In this case, you still owe the hirer for the excess mileage (£500, remember). Except, you've also paid £500 more than statutory amount of 50% owed under the hire agreement when you VT. In which case, the £500 you owe can be offset against the payments you carried on making after the 50% point.
In other words, you're still liable for the excess mileage and will have to make sure the amount you've paid above the 50% is equal to or greater than the total penalty for exceeding the mileage.
Edited by 10 Pence Short on Monday 24th March 14:20
10 Pence Short said:
On my reading the confusion comes down to this;
Firstly:
1) Section 99 of the Consumer Credit Act 1974 gives you the right to voluntarily terminate a hire purchase agreement at any time before the final payment is due.
2) Section 100(1) limits the amount you can owe to the hirer upon voluntary termination, to 50% of the total value of the agreement.
The confusion seems to be setting in because people are reading internet stories and not taking into account the full picture between the contract, legislation and each individual circumstance.
Here are two scenarios:
1) You have a car on a 24 month PCP with an agreed mileage of 10k per annum and 10 pence per mile charges over that. You pay £100 per month. The payment schedule means that you have paid 50% of the total payments due at the half way point of the agreement, at 12 months. In that time you have done 15,000 miles.
You VT the car having paid exactly 50% of the agreement. You are 5000 miles over the agreed mileage @ 10p per mile, so owe the finance company £500. They can claim this back from you, as this is a liability accrued prior to termination and is for your breach of contract.
Now, if the timing is a little different...
2) Same scenario as above, but you've made 5 more payments and terminate at the 17 month mark instead of 12 months. As it happens you're still 5000 miles over the agreed mileage limit. Except now, you've paid 50% of your agreement value, plus another 5 monthly payments, meaning you've paid £500 more under the agreement in installments.
In this case, you still owe the hirer for the excess mileage (£500, remember). Except, you've also paid £500 more than statutory amount of 50% owed under the hire agreement when you VT. In which case, the £500 you owe can be offset against the payments you carried on making after the 50% point.
There is no confusion on my part.Firstly:
1) Section 99 of the Consumer Credit Act 1974 gives you the right to voluntarily terminate a hire purchase agreement at any time before the final payment is due.
2) Section 100(1) limits the amount you can owe to the hirer upon voluntary termination, to 50% of the total value of the agreement.
The confusion seems to be setting in because people are reading internet stories and not taking into account the full picture between the contract, legislation and each individual circumstance.
Here are two scenarios:
1) You have a car on a 24 month PCP with an agreed mileage of 10k per annum and 10 pence per mile charges over that. You pay £100 per month. The payment schedule means that you have paid 50% of the total payments due at the half way point of the agreement, at 12 months. In that time you have done 15,000 miles.
You VT the car having paid exactly 50% of the agreement. You are 5000 miles over the agreed mileage @ 10p per mile, so owe the finance company £500. They can claim this back from you, as this is a liability accrued prior to termination and is for your breach of contract.
Now, if the timing is a little different...
2) Same scenario as above, but you've made 5 more payments and terminate at the 17 month mark instead of 12 months. As it happens you're still 5000 miles over the agreed mileage limit. Except now, you've paid 50% of your agreement value, plus another 5 monthly payments, meaning you've paid £500 more under the agreement in installments.
In this case, you still owe the hirer for the excess mileage (£500, remember). Except, you've also paid £500 more than statutory amount of 50% owed under the hire agreement when you VT. In which case, the £500 you owe can be offset against the payments you carried on making after the 50% point.
I am speaking as ex motor trade, ex Santander Bank for 7 years, so please dont refer to me under the category of "people reading internet stories" - i have been citing them as "examples"
10 Pence Short said:
"They can claim this back from you, as this is a liability accrued prior to termination and is for your breach of contract."
No they cant. The VT Clause of the CCA 1974 states that once you have paid 50% of the total amount owed you can return the car "with nothing further to pay". There is no sub clause that says "except excess mileage charges". That is your RIGHT as a consumer. Terms that a finance company put in a finance agreement CANNOT overwrite this.
daemon said:
Grandfondo said:
I don't know much about VT's but in a PCP wouldn't 50% be very nearly full term anyway?
Yes, quite close to full term.I haven't heard of it for a while but it used to be quite common amongst high-mileage drivers to get a car on HP over 5yrs, stick a huge mileage on it and then VT it at halfway. With low deposit HP, halfway really was halfway through the term. PCP moves it to near the end.
Grandfondo said:
daemon said:
Grandfondo said:
I don't know much about VT's but in a PCP wouldn't 50% be very nearly full term anyway?
Yes, quite close to full term.Must be a PCP contract though, not a lease.
daemon said:
va1o said:
I'd argue that in reality E is true. The mileage limit only really comes into force if you hand the car back at the end of the contract. If you pay the balloon figure or sell it yourself to pay off then you shouldn't have any issues.
Agree with the above - don't bother changing anything now.
If you hand the car back early under your consumer rights, having paid 50% of the total amount payable under the agreement, then they cannot enforce the mileage charges.Agree with the above - don't bother changing anything now.
This Volountry Termination at 50% and walking away from your excess mileage just isnt true sadly,
Here the Finance company won and thus its an option im not going to risk
http://www.ombudsman-decisions.org.uk/viewPDF.aspx...
Message Board | General Gassing | Top of Page | What's New | My Stuff