PCP and limited mileage
Discussion
I seek the knowledge of the finance bods.
My girlfriend has a Nissan Juke I believe on a PCP (she has the option of walking away, buying by paying a balloon or trading in) so I 'think' this is PCP.
Anyway she signed up to 8000 miles a year but has done alot more and is still a few years off completing it.
Will she just get stung at the end for the pence per mile over charge or can she re negotiate her terms albeit with a higher monthly outlay?
I know each contract is potentially different and I don't have it to hand, just wanted an opinion or if anybody else has been in a similar position.
My girlfriend has a Nissan Juke I believe on a PCP (she has the option of walking away, buying by paying a balloon or trading in) so I 'think' this is PCP.
Anyway she signed up to 8000 miles a year but has done alot more and is still a few years off completing it.
Will she just get stung at the end for the pence per mile over charge or can she re negotiate her terms albeit with a higher monthly outlay?
I know each contract is potentially different and I don't have it to hand, just wanted an opinion or if anybody else has been in a similar position.
DaveH23 said:
I seek the knowledge of the finance bods.
My girlfriend has a Nissan Juke I believe on a PCP (she has the option of walking away, buying by paying a balloon or trading in) so I 'think' this is PCP.
Anyway she signed up to 8000 miles a year but has done alot more and is still a few years off completing it.
Will she just get stung at the end for the pence per mile over charge or can she re negotiate her terms albeit with a higher monthly outlay?
I know each contract is potentially different and I don't have it to hand, just wanted an opinion or if anybody else has been in a similar position.
The only time the excess mileage is a consideration is if she voluntary terminates the agreement (usually only possible once 50% of the entire finance value including interest is paid) or hands it back instead of paying the balloon payment.My girlfriend has a Nissan Juke I believe on a PCP (she has the option of walking away, buying by paying a balloon or trading in) so I 'think' this is PCP.
Anyway she signed up to 8000 miles a year but has done alot more and is still a few years off completing it.
Will she just get stung at the end for the pence per mile over charge or can she re negotiate her terms albeit with a higher monthly outlay?
I know each contract is potentially different and I don't have it to hand, just wanted an opinion or if anybody else has been in a similar position.
If trading it in or buying outright there is no penalties.
Edit - This applies to PCP deals.
OpulentBob said:
Forgive my uneducated question, but how does that work?
PCP a car on a 5kpa policy, do 10kpa and as long as you trade it in for a new PCP at the end of the 3 years, no excess mileage charges apply?
I think they adjust the trade-in value to take into account the extra mileage - there's no way to avoid the excess, it just depends when it's applied.PCP a car on a 5kpa policy, do 10kpa and as long as you trade it in for a new PCP at the end of the 3 years, no excess mileage charges apply?
RTaylor2208 said:
The only time the excess mileage is a consideration is if she voluntary terminates the agreement (usually only possible once 50% of the entire finance value including interest is paid)
Are you sure on this one? My wife did a VT and was told excess mileage didn't apply as she hadn't completed the term?
OpulentBob said:
Forgive my uneducated question, but how does that work?
PCP a car on a 5kpa policy, do 10kpa and as long as you trade it in for a new PCP at the end of the 3 years, no excess mileage charges apply?
How can they? The car doesn't go back to the finance company in that scenario.PCP a car on a 5kpa policy, do 10kpa and as long as you trade it in for a new PCP at the end of the 3 years, no excess mileage charges apply?
If you trade a car in at the end of a PCP, as opposed to hand it back, the dealer buys it off you and pays the settlement figure. That figure is always the same.
The reduction in the value of the car is reflected in the amount you get for it. That could be less than you owe on the car, but might not be.
The risk of higher mileage is that if you had done the agreed mileage or less, you could always get what you owe at the end of the term by handing it back to the finance company then - if you go over, you can only get back what you owe less the excess mileage charge.
The VT bit all depends on the contract. We did it with a renault meagane RS about 2 years ago. In renualt finance's agreement if the car was returned under VT the mileage was worked out pro rata. So if you went over it was charged at 8PPM.
It all comes down to what's in the specific contract.
It all comes down to what's in the specific contract.
RTaylor2208 said:
The VT bit all depends on the contract. We did it with a renault meagane RS about 2 years ago. In renualt finance's agreement if the car was returned under VT the mileage was worked out pro rata. So if you went over it was charged at 8PPM.
It all comes down to what's in the specific contract.
I also ended up paying £300+ as a result of this but I'm not sure how that can be compliant with the legislation...It all comes down to what's in the specific contract.
CYMR0 said:
RTaylor2208 said:
The VT bit all depends on the contract. We did it with a renault meagane RS about 2 years ago. In renualt finance's agreement if the car was returned under VT the mileage was worked out pro rata. So if you went over it was charged at 8PPM.
It all comes down to what's in the specific contract.CYMR0 said:
I also ended up paying £300+ as a result of this but I'm not sure how that can be compliant with the legislation...
It's a bit of a grey area, but you shouldn't have to pay, or pay for damage as long as the car is in reasonable condition.Edited by Sheepshanks on Friday 7th August 12:00
DaveH23 said:
RTaylor2208 said:
If trading it in or buying outright there is no penalties.
Really?If this is true then brilliant. She will probably be trading in anyway.
Jonno02 said:
Idiotic to think that if you VT a PCP agreement a day before the term ends there's no mileage penalty.
The problem is that s.99 CCA 1974 implies a term that, if you have paid over half the total credit price under a debtor/supplier/creditor relationship you can hand the car back at any time without any further payment.The total credit price is defined as:
Deposit - £1k
Monthly Payments - £200 x 36
MGFV + mileage charge - £5000 + 5p/mile after 6k p.a.
Total credit price at 6k pa is therefore £13200.
Total credit price at 25k pa is £13200 + (57000 x 0.05 for the excess mileage) less (57000 x 0.05 for the reduction in MGFV).
So whether you've done 18k or 75k you've paid over the total credit price - the finance company's argument is that the excess mileage is a form of damage that is recoverable via the mileage charge. I'm not personally convinced by that, although the legislation is definitely harsh on the finance company if that argument is not correct.
CYMR0 said:
So whether you've done 18k or 75k you've paid over the total credit price - the finance company's argument is that the excess mileage is a form of damage that is recoverable via the mileage charge. I'm not personally convinced by that, although the legislation is definitely harsh on the finance company if that argument is not correct.
It was a common problem with HP and it's one of the reasons car companies like PCPs - VT doesn't make so much sense with PCP.As you say, they claim excess mileage as if it's damage but I'm not aware it's ever been fully tested in court hence it comes down to a battle of wills. Of course if it got to a small claims court there's every chance the Judge would think the customer was taking mick and award against them anyway.
nickfrog said:
So one way or the other, you do pay for excess mileage - this seems like another facet of the fairly high level of opacity of PCP.
You do pay, but as long as you have different options at the end of the contract, some of them will be more appealing than others.With contract hire, you *will* pay the excess mileage charge - end of. Go 50k over and that could be £2,500 or £10k.
With PCP, you can hand back once you've paid back over 50% of the total credit price and lose equity in the car - so not great if you actually have equity, not an issue if you're underwater as you end up better off. If there is equity in the car, you can then effectively buy the car - and potentially trade it in immediately for more than you've just paid, cashing in your equity - but you don't have to do that of course.
If the balloon is so high that you haven't paid off 50% of the total credit price - possible on a 2-year deal - then handing back under the PCP (rather than under voluntary termination) and paying the excess mileage charge may be your best option.
If she's planning on exercising her right to hand the car back to the finance company at the end of the agreement and it's over mileage she'll have to pay an excess mileage charge, a few pennies a mile.
If she's planning to part exchanging for another car it's not so much of an issue, yes her car will be worth slightly less if it's over the agreed miles but hopefully she'll still be in equity, providing she's looked after the car and it's serviced properly and the GMFV wasn't set to keenly by the finance company when she bought it.
If she's planning to part exchanging for another car it's not so much of an issue, yes her car will be worth slightly less if it's over the agreed miles but hopefully she'll still be in equity, providing she's looked after the car and it's serviced properly and the GMFV wasn't set to keenly by the finance company when she bought it.
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