PCP finance & contract mileage question?
Discussion
a question for those in the know / use PCP;
If the contract mileage is 8K - what happens if you end up doing 10K? is it;
a) doesn't matter - you'll chop in in with equity before the 36 or 48month term is up?
b) doesn't matter as you intend to keep the car and pay the final payment at the end of the 36/40 month term?
c) pay excess mileage penalty (over 8k) as its not that much?
d) change from 8k to 10k contract?
e) it only matters if you intend to hand the car back early or at the end of contract?
The reason I ask? I did 8k last year, 12K the year before and not sure if I'll be doing 8k every year or maybe 10k
thanks!
R
If the contract mileage is 8K - what happens if you end up doing 10K? is it;
a) doesn't matter - you'll chop in in with equity before the 36 or 48month term is up?
b) doesn't matter as you intend to keep the car and pay the final payment at the end of the 36/40 month term?
c) pay excess mileage penalty (over 8k) as its not that much?
d) change from 8k to 10k contract?
e) it only matters if you intend to hand the car back early or at the end of contract?
The reason I ask? I did 8k last year, 12K the year before and not sure if I'll be doing 8k every year or maybe 10k
thanks!
R
ritch said:
a question for those in the know / use PCP;
If the contract mileage is 8K - what happens if you end up doing 10K? is it;
a) doesn't matter - you'll chop in in with equity before the 36 or 48month term is up?
b) doesn't matter as you intend to keep the car and pay the final payment at the end of the 36/40 month term?
c) pay excess mileage penalty (over 8k) as its not that much?
d) change from 8k to 10k contract?
e) it only matters if you intend to hand the car back early or at the end of contract?
The reason I ask? I did 8k last year, 12K the year before and not sure if I'll be doing 8k every year or maybe 10k
thanks!
R
a,b, c or d are all valid options.If the contract mileage is 8K - what happens if you end up doing 10K? is it;
a) doesn't matter - you'll chop in in with equity before the 36 or 48month term is up?
b) doesn't matter as you intend to keep the car and pay the final payment at the end of the 36/40 month term?
c) pay excess mileage penalty (over 8k) as its not that much?
d) change from 8k to 10k contract?
e) it only matters if you intend to hand the car back early or at the end of contract?
The reason I ask? I did 8k last year, 12K the year before and not sure if I'll be doing 8k every year or maybe 10k
thanks!
R
e is not strictly true.
daemon said:
ritch said:
a question for those in the know / use PCP;
If the contract mileage is 8K - what happens if you end up doing 10K? is it;
a) doesn't matter - you'll chop in in with equity before the 36 or 48month term is up?
b) doesn't matter as you intend to keep the car and pay the final payment at the end of the 36/40 month term?
c) pay excess mileage penalty (over 8k) as its not that much?
d) change from 8k to 10k contract?
e) it only matters if you intend to hand the car back early or at the end of contract?
The reason I ask? I did 8k last year, 12K the year before and not sure if I'll be doing 8k every year or maybe 10k
thanks!
R
a,b, c or d are all valid options.If the contract mileage is 8K - what happens if you end up doing 10K? is it;
a) doesn't matter - you'll chop in in with equity before the 36 or 48month term is up?
b) doesn't matter as you intend to keep the car and pay the final payment at the end of the 36/40 month term?
c) pay excess mileage penalty (over 8k) as its not that much?
d) change from 8k to 10k contract?
e) it only matters if you intend to hand the car back early or at the end of contract?
The reason I ask? I did 8k last year, 12K the year before and not sure if I'll be doing 8k every year or maybe 10k
thanks!
R
e is not strictly true.
It is obviously very dependent on the car but the chances are that you will still have equity. MFRs are normally pretty cautious with GFVs. Or to put it another way, the difference in trade in value between 24k and 30k isn't that much on a lot of cars so it is often not an issue. Unless the GFV/Settlement figure has been set close to the wire.
If you wanted to be ultra cautious set some money aside for the extra mileage fee and then you're covered either way. I personally wouldn't bother trying to change anything for now.
Edited by waterwonder on Saturday 22 March 12:11
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.
Agree with the above - don't bother changing anything now.
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.
daemon said:
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.
If you're morally bankrupt. I know it's there but that's not what it's for. Let's all get credit then wriggle out of our obligations. waterwonder said:
daemon said:
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.
If you're morally bankrupt. I know it's there but that's not what it's for. Let's all get credit then wriggle out of our obligations. Because banks and finance companies never wriggle out of their obligations?
Because banks and finance companies are our friends?
Because you want to contribute to the billions they already make off us?
It is your rights under the Consumer Credit Act to be able to hand the car back after you have paid 50% of the total agreement price, with nothing more to pay.
So yes, if you want to be a sheep and follow their rules and stiff you of even more money, go for it
daemon said:
eye for an eye etc
Because it is endemic of current attitudes and only succeeds in a race to the bottom. I'm ceryainly not immune from it however too much these days is about screwing people to the letter of the law. That just ups the ante on both sides with each going further and further to screw.
Plus it's not quite a get out of jail free card. I have seen people fail finance as a consequence of doing this in the past.
Edited by waterwonder on Sunday 23 March 14:12
waterwonder said:
daemon said:
eye for an eye etc
Because it is endemic of current attitudes and only succeeds in a race to the bottom. I'm ceryainly not immune from it however too much these days is about screwing people to the letter of the law. That just ups the ante on both sides with each going further and further to screw.
Plus it's not quite a get out of jail free card. I have seen people fail finance as a consequence of doing this in the past.
They cannot and will not hold it against you if you exercise this right, as you are not defaulting and you are doing nothing wrong.
I've done it several times in the past and i've had letters back from the finance company saying thanks for your business, let us know when you are buying another car and we'll quote you for it.
Finance companies would love us all to have your mindset that its "morally wrong" to do so and that you wont get finance again if you do it, but its simply not the case.
They HATE the fact the clause is there, but theres nothing they can do about it. What is bad news for them, is good news for us, the consumer.
ritch said:
but surely that would leave you significantly out of pocket? especially if you invested a decent deposit?
You're only like to use it if it would leave the finance company out of pocket. I.e it benefits you. E.g car is worth less than settlement figure therefore you pass the problem to the finance co.
waterwonder said:
ritch said:
but surely that would leave you significantly out of pocket? especially if you invested a decent deposit?
You're only like to use it if it would leave the finance company out of pocket. I.e it benefits you. E.g car is worth less than settlement figure therefore you pass the problem to the finance co.
For clarification, because you're moving away from the point in hand :-
(a) IF you have a PCP agreement and a "pence per mile" on excess miles, you can reasonably circumvent this payment by handing the car back AFTER you've paid 50% of the total agreement cost, providing you have kept the car to a good standard. Now, a "good standard" may not be doing 30K miles a year, however it would be reasonable to assume that if you have a 6,000 mile pa agreement but are doing 13,000 miles pa and hand it back, theres little the finance company can do, as 13K miles per year is reasonable. But you MUST have made 50% of the payments and must not - and never have been - in arrears, otherwise the finance company will stiff you as they will say you broke the contract in the first place.
If a PCP agreement comes to a natural end, and the car is worth less than the Guaranteed Future Value predicted by the finance company, then that is THEIR problem. That is the risk they take. BMW Finance fell foul of this around 2007 during the credit crunch as they had set the GFV's very high so people simply handed them back when their values crashed. Cost BMW Finance hundreds of millions.
If you have paid more than 50% of the total transaction cost, and you hand the car back and its worth LESS than the outstanding finance amount, that is THEIR problem. They might not make it easy for you to do, and they dont promote this information, but it is your right to do so. Dont forget they have probably made several thousand in interest charges off you, so probably worst case they are going to get their capital back. Anything over and above that is a bonus for them.
If you really feel sorry for them, and dont think they are making enough off you, i am sure you can send them a cash donation to help them keep going.
Edited by daemon on Sunday 23 March 14:30
I fully understand how it works however it doesn't change my points above (IMO).
They don't mark your credit score but thats not what I suggested.
Anyway we digress.
OP VT is always an option if you've paid more than 50%.
daemon said:
They cannot and will not hold it against you if you exercise this right, as you are not defaulting and you are doing nothing wrong.
I have seen first hand people being refused credit on HP terms because they've VT'd before. They don't mark your credit score but thats not what I suggested.
Anyway we digress.
OP VT is always an option if you've paid more than 50%.
Edited by waterwonder on Sunday 23 March 16:46
waterwonder said:
I fully understand how it works however it doesn't change my points above (IMO).
They don't mark your credit score but thats not what I suggested.
Anyway we digress.
OP VT is always an option if you've paid more than 50%.
Good to hear you standing up for the finance companies.daemon said:
They cannot and will not hold it against you if you exercise this right, as you are not defaulting and you are doing nothing wrong.
I have seen first hand people being refused credit on HP terms because they've VT'd before. They don't mark your credit score but thats not what I suggested.
Anyway we digress.
OP VT is always an option if you've paid more than 50%.
Edited by waterwonder on Sunday 23 March 16:46
Just what we need. Somebody who believes they're hard done by.
Just to clarify further - your PCP agreement will have an excess mileage charge shown somewhere. This is only of significance if the finance company take possession of the car, either at the end of the term, or if you voluntarily terminate during the agreement. If you sell the car, part exchange it or pay the balloon and keep the car at the end of the term then the excess mileage is not pertinent.
Do note that if you voluntarily terminate the car after paying 50% of the TOTAL rentals, and you have covered more than the pro-rata mileage then the finance company do have the right to charge excess mileage.
For example.
Finance agreement with a £5,000 deposit, 35 monthly payments of £500 and a final balloon payment of £8,000, which has been calculated on you covering 10,000 miles per year, and an excess mileage charge of 8p per mile.
Total payable under the agreement: 35 x £500 plus £5,000 plus £8,000: £30,500. Half of this is £15,250. You would reach this point after making 21 monthly payments (21 x £500 plus 5,000 deposit).
At month 21, if you are on target with your mileage of 10,000 per year, you will have covered 17,500 miles. So if you haven't covered more than this you can terminated without any further obligation as long as the car has been kept in reasonable condition.
If you have covered more than the 17,500 miles at this point then the finance company do have the right to charge for any excess mileage - so for example if you had covered 20,000 miles, that's 2,500 miles at 6p per mile = £150.00.
Do note that if you voluntarily terminate the car after paying 50% of the TOTAL rentals, and you have covered more than the pro-rata mileage then the finance company do have the right to charge excess mileage.
For example.
Finance agreement with a £5,000 deposit, 35 monthly payments of £500 and a final balloon payment of £8,000, which has been calculated on you covering 10,000 miles per year, and an excess mileage charge of 8p per mile.
Total payable under the agreement: 35 x £500 plus £5,000 plus £8,000: £30,500. Half of this is £15,250. You would reach this point after making 21 monthly payments (21 x £500 plus 5,000 deposit).
At month 21, if you are on target with your mileage of 10,000 per year, you will have covered 17,500 miles. So if you haven't covered more than this you can terminated without any further obligation as long as the car has been kept in reasonable condition.
If you have covered more than the 17,500 miles at this point then the finance company do have the right to charge for any excess mileage - so for example if you had covered 20,000 miles, that's 2,500 miles at 6p per mile = £150.00.
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