Should I worry about mileage when PCP'ing
Discussion
I'm potentially going to be PCP'ing a car at 10k miles but will probably do more than this due to driving for work.
A mate of mine who has PCP'ed lots but always part ex-ed his cars at other dealers or sold privately and cleared the finance before the end of the PCP said if you're doing this it doesn't matter as much about the miles.
This is because another dealer wouldn't care and if you continue the PCP to the end and take another car from the dealer you purchased through, that often they disregard the mileage excess as they want to get you into a new car.
Keeping the mileage low obviously keeps the cost down so interested to hear peoples experiences with this...
Cheers!
A mate of mine who has PCP'ed lots but always part ex-ed his cars at other dealers or sold privately and cleared the finance before the end of the PCP said if you're doing this it doesn't matter as much about the miles.
This is because another dealer wouldn't care and if you continue the PCP to the end and take another car from the dealer you purchased through, that often they disregard the mileage excess as they want to get you into a new car.
Keeping the mileage low obviously keeps the cost down so interested to hear peoples experiences with this...
Cheers!
I'd be more wary if incurring the wrath of the PCP haters on here and being marked out as a 'peasant' (their words not mine)....
On a more serious note, excess mileage is only an issue if handing the car back at the end of the term or at the VT point. I'd have thought that it was best to get pay for what you realistically expect to do to avoid any big bills at the end should you hand the car back and walk away.
On a more serious note, excess mileage is only an issue if handing the car back at the end of the term or at the VT point. I'd have thought that it was best to get pay for what you realistically expect to do to avoid any big bills at the end should you hand the car back and walk away.
It's fine selling the cars privately or trading them in at another dealer but I guess the issue is that the dealers structure the PCP in such a way that there is usually very liitle to no equity in the cars come the end of the deal, even possible negative equity in which case you could find yourself either losing money on the trade in or paying excess mileage charges.
It's a gamble but if you are aware you can make informed choices
It's a gamble but if you are aware you can make informed choices
Jamescrs said:
It's fine selling the cars privately or trading them in at another dealer but I guess the issue is that the dealers structure the PCP in such a way that there is usually very liitle to no equity in the cars come the end of the deal, even possible negative equity in which case you could find yourself either losing money on the trade in or paying excess mileage charges.
It's a gamble but if you are aware you can make informed choices
As you say though, that's only an issue if you went back to the same dealer? Granted you may get less than the GFV on a trade-in/private sale elsewhere anyway and that's a risk.It's a gamble but if you are aware you can make informed choices
To make the gamble or not is the question!
Can get a vastly better deal on 8k miles!
Court_S said:
I'd be more wary if incurring the wrath of the PCP haters on here and being marked out as a 'peasant' (their words not mine)....
On a more serious note, excess mileage is only an issue if handing the car back at the end of the term or at the VT point. I'd have thought that it was best to get pay for what you realistically expect to do to avoid any big bills at the end should you hand the car back and walk away.
Haha, I've only leased before and not PCP'ed. Still haggling around at the moment so might lease again.On a more serious note, excess mileage is only an issue if handing the car back at the end of the term or at the VT point. I'd have thought that it was best to get pay for what you realistically expect to do to avoid any big bills at the end should you hand the car back and walk away.
If I get called a 'peasant' then fair enough!
You will end up paying for the excess mileage one way or another.
It's a lovely idea that a dealer will "disregard" the excess mileage payments if you buy another car off them, but in reality all they are doing is settling the finance on the old car they're taking as PX and adjusting the numbers on the next finance deal to cover it.
At this point you could be in negative equity but that will either be silently bundled into your new car deal or reduce the amount of discount you could get.
None of this is necessarily a problem as long as you're completely aware of what you're doing, but don't kid yourself that you're doing anything other than kicking the can down the road. Sooner or later you will end up paying for those extra miles, it's just a question of whether it costs more to do it up front or at the end.
It's a lovely idea that a dealer will "disregard" the excess mileage payments if you buy another car off them, but in reality all they are doing is settling the finance on the old car they're taking as PX and adjusting the numbers on the next finance deal to cover it.
At this point you could be in negative equity but that will either be silently bundled into your new car deal or reduce the amount of discount you could get.
None of this is necessarily a problem as long as you're completely aware of what you're doing, but don't kid yourself that you're doing anything other than kicking the can down the road. Sooner or later you will end up paying for those extra miles, it's just a question of whether it costs more to do it up front or at the end.
Jamescrs said:
It's fine selling the cars privately or trading them in at another dealer but I guess the issue is that the dealers structure the PCP in such a way that there is usually very liitle to no equity in the cars come the end of the deal, even possible negative equity in which case you could find yourself either losing money on the trade in or paying excess mileage charges.
It's a gamble but if you are aware you can make informed choices
This, most PCP agreements generally mean you are in negative equity for the duration of your agreement, unless you have put down a large deposit upfront or have a car bucking the trend.. The calc to perform is how much the excess per mile is vs the agreement with the additional mileage..It's a gamble but if you are aware you can make informed choices
G
charltjr said:
You will end up paying for the excess mileage one way or another.
It's a lovely idea that a dealer will "disregard" the excess mileage payments if you buy another car off them, but in reality all they are doing is settling the finance on the old car they're taking as PX and adjusting the numbers on the next finance deal to cover it.
At this point you could be in negative equity but that will either be silently bundled into your new car deal or reduce the amount of discount you could get.
None of this is necessarily a problem as long as you're completely aware of what you're doing, but don't kid yourself that you're doing anything other than kicking the can down the road. Sooner or later you will end up paying for those extra miles, it's just a question of whether it costs more to do it up front or at the end.
More or less this. The finance needs settling, and how much you owe will be based on the mileage. It's a lovely idea that a dealer will "disregard" the excess mileage payments if you buy another car off them, but in reality all they are doing is settling the finance on the old car they're taking as PX and adjusting the numbers on the next finance deal to cover it.
At this point you could be in negative equity but that will either be silently bundled into your new car deal or reduce the amount of discount you could get.
None of this is necessarily a problem as long as you're completely aware of what you're doing, but don't kid yourself that you're doing anything other than kicking the can down the road. Sooner or later you will end up paying for those extra miles, it's just a question of whether it costs more to do it up front or at the end.
So for example, if you buy a £40,000 car, and tell them you'll do 5000 miles per year, they may estimate your car be worth £20,000 at the end of the term (GFV).
If you then do 15,000 miles per year, you'll likely find the car worth more like £10,000.
You can go elsewhere to not pay the mileage charge, but unless you can get £20,000 for your car that is likely only worth £10,000 because of the extra mileage you've a gap that needs paying (the GFV isn't the value to you, it's how much the car costs if you want to buy it/settle it to part-ex).
All numbers are hypothetical and for example
That's where the kicking the can down the road comes in, that deficit might just be rolled into the next loan/pcp/lease but you're still paying it one way or another.
phil4 said:
More or less this. The finance needs settling, and how much you owe will be based on the mileage.
So for example, if you buy a £40,000 car, and tell them you'll do 5000 miles per year, they may estimate your car be worth £20,000 at the end of the term (GFV).
If you then do 15,000 miles per year, you'll likely find the car worth more like £10,000.
You can go elsewhere to not pay the mileage charge, but unless you can get £20,000 for your car that is likely only worth £10,000 because of the extra mileage you've a gap that needs paying (the GFV isn't the value to you, it's how much the car costs if you want to buy it/settle it to part-ex).
All numbers are hypothetical and for example
That's where the kicking the can down the road comes in, that deficit might just be rolled into the next loan/pcp/lease but you're still paying it one way or another.
Ok that makes sense. Thanks.So for example, if you buy a £40,000 car, and tell them you'll do 5000 miles per year, they may estimate your car be worth £20,000 at the end of the term (GFV).
If you then do 15,000 miles per year, you'll likely find the car worth more like £10,000.
You can go elsewhere to not pay the mileage charge, but unless you can get £20,000 for your car that is likely only worth £10,000 because of the extra mileage you've a gap that needs paying (the GFV isn't the value to you, it's how much the car costs if you want to buy it/settle it to part-ex).
All numbers are hypothetical and for example
That's where the kicking the can down the road comes in, that deficit might just be rolled into the next loan/pcp/lease but you're still paying it one way or another.
I'll have a think, will prob go for 10k miles to be extra sure. Have to be a bit more careful on the lease route and I had to be sure I didn't go over last time however I ended up buying the car off the lease co for a very good price, and they didn't really care about the mileage. They asked me the figure and never questioned it or wanted to look at it.
I think because they just want to get rid to save them taking it to auction. This is why I'm tempted to lease again...
sharepointalex said:
sxmwht said:
Only matters if you want to hand back, and in that case I guess they might disregard it for you, as you say.
Don't sweat it.
Brill - thank you!Don't sweat it.
Thinking of 8k miles you see, but I could easily clock up say 4k miles in 3 months with the driving i'm doing for work...
Your car will be worth what a car that has done 16k a year worth of miles!
No experience of pcp (usually lease but just took my first pcp awaiting delivery).
Pay attention to the excess mileage charge. If you go over due to business miles and are eligible to claim business mileage through work/hmrc, then use the hmrc tax break to put aside the cash to cover the excess miles.
For example - let’s say you do 13k in year 1 and 3k of that was business miles. You claim back £0.45 from hmrc per mile (or some from work and the difference from hmrc) so you end up with 0.45 x 3000 = £1350 pre tax. If you’re a 40% tax payer (likely worst case) you’ll get £540 back at the end of the year as a cheque from hmrc. Save that £540.
If your excess mileage is 11ppm pre vat then it’s roughly 13ppm after vat. 3000 miles x 13p = £390 excess mileage charge. That’s fine, you’ve got 540 to cover it.
Now, if you excess mileage charge was 20p plus vat is 24ppm, then you find yourself in a sticky spot. You’d owe £720 that year but only have 540 back.
This is a theory and untested. Can someone tell me if it’s madness or logical?
Thanks
Rick
Pay attention to the excess mileage charge. If you go over due to business miles and are eligible to claim business mileage through work/hmrc, then use the hmrc tax break to put aside the cash to cover the excess miles.
For example - let’s say you do 13k in year 1 and 3k of that was business miles. You claim back £0.45 from hmrc per mile (or some from work and the difference from hmrc) so you end up with 0.45 x 3000 = £1350 pre tax. If you’re a 40% tax payer (likely worst case) you’ll get £540 back at the end of the year as a cheque from hmrc. Save that £540.
If your excess mileage is 11ppm pre vat then it’s roughly 13ppm after vat. 3000 miles x 13p = £390 excess mileage charge. That’s fine, you’ve got 540 to cover it.
Now, if you excess mileage charge was 20p plus vat is 24ppm, then you find yourself in a sticky spot. You’d owe £720 that year but only have 540 back.
This is a theory and untested. Can someone tell me if it’s madness or logical?
Thanks
Rick
Rick-fgpe0 said:
No experience of pcp (usually lease but just took my first pcp awaiting delivery).
Pay attention to the excess mileage charge. If you go over due to business miles and are eligible to claim business mileage through work/hmrc, then use the hmrc tax break to put aside the cash to cover the excess miles.
For example - let’s say you do 13k in year 1 and 3k of that was business miles. You claim back £0.45 from hmrc per mile (or some from work and the difference from hmrc) so you end up with 0.45 x 3000 = £1350 pre tax. If you’re a 40% tax payer (likely worst case) you’ll get £540 back at the end of the year as a cheque from hmrc. Save that £540.
If your excess mileage is 11ppm pre vat then it’s roughly 13ppm after vat. 3000 miles x 13p = £390 excess mileage charge. That’s fine, you’ve got 540 to cover it.
Now, if you excess mileage charge was 20p plus vat is 24ppm, then you find yourself in a sticky spot. You’d owe £720 that year but only have 540 back.
This is a theory and untested. Can someone tell me if it’s madness or logical?
Thanks
Rick
This makes sense and is a good point. I currently get 11p a mile from my employer and claim the difference back from HRMC up to 45p so it's good point to set this aside (something I don't really do at the moment as I own my current BMW 335d).Pay attention to the excess mileage charge. If you go over due to business miles and are eligible to claim business mileage through work/hmrc, then use the hmrc tax break to put aside the cash to cover the excess miles.
For example - let’s say you do 13k in year 1 and 3k of that was business miles. You claim back £0.45 from hmrc per mile (or some from work and the difference from hmrc) so you end up with 0.45 x 3000 = £1350 pre tax. If you’re a 40% tax payer (likely worst case) you’ll get £540 back at the end of the year as a cheque from hmrc. Save that £540.
If your excess mileage is 11ppm pre vat then it’s roughly 13ppm after vat. 3000 miles x 13p = £390 excess mileage charge. That’s fine, you’ve got 540 to cover it.
Now, if you excess mileage charge was 20p plus vat is 24ppm, then you find yourself in a sticky spot. You’d owe £720 that year but only have 540 back.
This is a theory and untested. Can someone tell me if it’s madness or logical?
Thanks
Rick
I'm going to find out the excess mile charge on the PCP and lease I'm looking at.
Cheers
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