Excess Mileage Charge

[andyvee]

That is what I thought until I read the agreement - interesting how they try it on - the exact wording of clause 11.4 is

 

"If this Agreement terminates early, we will reduce the Maximum Total Mileage in the proportion which the actual period of hire bears to the period of hire originally agreed. Any Excess Mileage Charge will be recalculated using that reduced Maximum Total Mileage."

 

BUT the clause on VT states, 

Termination - your rights

You have a right to end this agreement. To do so, you should write to the person you make your payments to. They will then be entitled to the return of the goods and to half the total amount payable under this agreement, that is £xxxxxx. If you have already paid at least this amount plus any overdue instalments and have taken reasonable care of the goods, you will not have to pay any more.

 

So they definitely contradict each other!

[Defenderben]

I read that as mileage charges for "terminates early" I.e before your statutory get out point for the VT of 50% payments made. Once you have hit the 50% point you are not opting out early

[andyvee]

The VT clause comes first in the contract, and has a definitive statement of "you will not have to pay any more." - in my limited understanding of contract law that would make any contradictory statements that come after it in the contract null and void anyway.

 

That should save me a few quid come the 50%  mark as I will be well over my mileage

[GoneToBeemer]

Surely then if this was the case, you could put down a bare minimum deposit, set your mileage to 6,000 a year, basically drive it as far as your want (keeping the car in good condition) and just hand it back after the 50% mark? I'm sure this can't be right...if it is I wish I would have known, rather than taking out my 20,000 mile a year PCH!

Surely the finance companies must be wise to this clause and the ability to exploit it (if you're that way inclined) and just completely take the pish?! Maybe I'll get a new car on PCH and do 100,000 miles in it and just hand it back after the 50% mark without any comeback!

[andyvee]

.... exactly the same as you can buy a car on 5yr HP (which has no mileage restrictions) and pay 50% and just hand it back. Monthly payments on 5yr HP are roughly what they are on 3 year 10k pa PCP as well.

 

..... and most people don't read contracts or understand their rights as a consumer

Edited 26 January, 2016 by andyvee

[GoneToBeemer]

Maybe I'll just have to be "that way inclined" when I buy my next car ha!

[the_minch]

Surely then if this was the case, you could put down a bare minimum deposit, set your mileage to 6,000 a year, basically drive it as far as your want (keeping the car in good condition) and just hand it back after the 50% mark? I'm sure this can't be right...if it is I wish I would have known, rather than taking out my 20,000 mile a year PCH!

Surely the finance companies must be wise to this clause and the ability to exploit it (if you're that way inclined) and just completely take the pish?! Maybe I'll get a new car on PCH and do 100,000 miles in it and just hand it back after the 50% mark without any comeback!

The finance companies can not do anything about it, it needs an act of Parliament to change and at the last attempt it was thrown out.

I believe some private hire drivers do this, they set the mileage to 5k a year, and hand it back with over a 100k on the clock and there is nothing the finance company can do. Oh and pay little or no deposit and have the car on a 0% deal.

The finance companies do not tell people about it and it is always hiden in the depths of your contract but it can be done on any finance agreement whether it be for a washing machine or a car.

[GoneToBeemer]

So does this apply to PCH finance deals too then??

[andyvee]

I wouldn't have thought so, as they are not a finance deal, they are a lease deal.

[GoneToBeemer]

Damn...now there was me thinking I can get a new car after 18 months rather than 36!

[andyvee]

Have a look at your agreement, but as it isn't credit to buy something then pretty sure it doesn't apply

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[tigermad]

Reviving this old topic. What happens if I want to go on another PCP deal at the end of the contract and I have gone over by 10-15K do they knock the money off what the car is worth and I will end up in negative equity? I was also told that the excess wouldn't matter unless I hand the car back.

[andyvee]

If you are trading in the car is valued as it stands. There is no GFV if you have exceeded your mileage allowance unless you pay the excess mileage charge. In those circumstances you may be better off going down the VT route and buying a new car with maximum upfront discount instead. You will have to do your sums ........

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[tigermad]

If you are trading in the car is valued as it stands. There is no GFV if you have exceeded your mileage allowance unless you pay the excess mileage charge. In those circumstances you may be better off going down the VT route and buying a new car with maximum upfront discount instead. You will have to do your sums ........

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So I will have to pay the excess charge then one way or another? Thats not what Skoda is making everyone believe when doing the deal.

[andyvee]

No, you only have to pay the excess mileage if you want the GFV. If you trade in, the dealer will value the car as it stands based on condition and mileage. You then have an outstanding finance balance to pay off from the trade in value. You will probably be a couple of K negative equity in this case.

Your second option is to pay the excess mileage and hand the car back as you will get the GFV and clear the finance. You can then get as much discount as possible as you are not trading in.

Option 3 is to VT. As soon as you have paid 50% of the total amount payable under the agreement you have a right to hand back and terminate the agreement, regardless of mileage. Then do a deal on a new car with maximum discount.

You will have to do your sums, but option 3 may well be the best overall deal.

Given that the O3 GFVs look to be on the optimistic side, don't expect much if any equity in the car if you go down option 1 or 2, especially if you are way over your mileage limit.

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[philhoward]

After reading about VT, I had a closer look at my paperwork.  The VT figure (on a 3 year PCP for our Citigo) is reached at 29.95 months in - so 6 months early than doing the GFV dance.  Go VT and there are no excess mileage charges to pay (it just has to be in roadworthy condition, I think).

 

No wonder they don't mention it out loud and we can guarantee when we will get the "friendly" call from the dealer - about a month before then.

[tigermad]

No, you only have to pay the excess mileage if you want the GFV. If you trade in, the dealer will value the car as it stands based on condition and mileage. You then have an outstanding finance balance to pay off from the trade in value. You will probably be a couple of K negative equity in this case.

Your second option is to pay the excess mileage and hand the car back as you will get the GFV and clear the finance. You can then get as much discount as possible as you are not trading in.

Option 3 is to VT. As soon as you have paid 50% of the total amount payable under the agreement you have a right to hand back and terminate the agreement, regardless of mileage. Then do a deal on a new car with maximum discount.

You will have to do your sums, but option 3 may well be the best overall deal.

Given that the O3 GFVs look to be on the optimistic side, don't expect much if any equity in the car if you go down option 1 or 2, especially if you are way over your mileage limit.

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Thanks for clarifying. So if I took option 3, I am in a 42 month deal, then I would need to find a decent deposit for a new car I guess.

If I wanted to pay the excess hopefully it will come to less that 1k. I am nearly 2 years in to my Pcp so have ages to go yet, either way. But have will have done 30k when I have reached 2 years, limit was 20k (10k per year).

Just checked my contract and I can't really do an early deal. I wont have paid half until 37 months in. It's because I had a very small deposit. Does anyone think it would be worth doing at that stage?

Edited 9 March, 2016 by tigermad

[andyvee]

Off a small deposit, VT might be the way to go.

Only way to find out is start shopping with 6 months left to run. A factory order is 3 months, so you can weigh up your options when you have a good idea what your car is worth as a trade in.

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[tigermad]

Just booked in my 30000 mile service. They advised me to contact VW finance and let them know I am going over my mileage for the PCP, I have nearly 18 months left and am already at 27000 miles on a 10000 miles per year PCP. Is this a good idea? The garage thinks they may adjust my payments so I dont get a big shock on the changeover. But if I do a VT then phoning them is pointless isn't it?

[JamesVRSmk3]

But if I do a VT then phoning them is pointless isn't it?

 

Correct - By adjusting your payments you are only making sure they claw back some of the excess milleage charges.

[Geek42]

That is what I thought until I read the agreement - interesting how they try it on - the exact wording of clause 11.4 is

 

"If this Agreement terminates early, we will reduce the Maximum Total Mileage in the proportion which the actual period of hire bears to the period of hire originally agreed. Any Excess Mileage Charge will be recalculated using that reduced Maximum Total Mileage."

 

BUT the clause on VT states, 

Termination - your rights

You have a right to end this agreement. To do so, you should write to the person you make your payments to. They will then be entitled to the return of the goods and to half the total amount payable under this agreement, that is £xxxxxx. If you have already paid at least this amount plus any overdue instalments and have taken reasonable care of the goods, you will not have to pay any more.

 

So they definitely contradict each other!

 

I have no knowledge of contract law, but are we sure that these clauses are contradictory? Could it not be argued that sticking to the agreed mileage is part of taking "reasonable care of the goods"?

[GoneToBeemer]

I have no knowledge of contract law, but are we sure that these clauses are contradictory? Could it not be argued that sticking to the agreed mileage is part of taking "reasonable care of the goods"?

Not sure how mileage could be related to taking "reasonable care of the goods" as it relates to the physical condition of the vehicle. Again, I have no knowledge of contract law either, so just my opinion.

Has anyone on here actually gone down the route of VT and have been significantly over their agreed mileage? If so, were you successful in just handing the car back?

[andyvee]

Not sure how mileage could be related to taking "reasonable care of the goods" as it relates to the physical condition of the vehicle. Again, I have no knowledge of contract law either, so just my opinion.

Has anyone on here actually gone down the route of VT and have been significantly over their agreed mileage? If so, were you successful in just handing the car back?

It has been done apparently.

I'll let you know when I get to 50% LOL

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[andyvee]

I have no knowledge of contract law, but are we sure that these clauses are contradictory? Could it not be argued that sticking to the agreed mileage is part of taking "reasonable care of the goods"?

Doubt it, as the same 50% rule applies to standard HP where mileage doesn't come in to it. It is a consumer right.

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[GoneToBeemer]

It has been done apparently.

I'll let you know when I get to 50% LOL

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Haha...I'd be very interested in the outcome! Will drastically change the way I buy my next car!