A question for any of you with pcp expertise !

I am aware of the  basic principles of a PCP as I have had many 😀. One thing I have never understood though is if you only really have the intention of trading the vehicle in to either a dealer or the likes of wbac, motorway etc as opposed to the option of returning to the lease company, is there are any point setting it up with a higher (even if it is more realistic) annual mileage and paying more per month? If I understand it correctly, if I set a lower annual mileage I pay less per month so isn’t it better to do this and then just receive whatever the then market value is once it is traded in via the above routes or have I misunderstood?
 

The reason I ask is for the first time in my pcp history, I may go over the annual mileage set by 1-2k per year. I am in first year of a four year pcp.
Therefore, do I 

a) renogotiate mileage with lease company and pay more month

b) stick with mileage limit and pay whatever mileage penalty is if I choose to hand it back to lease company

c) trade it in as above at the relevant point and just take a chance on the trade in value compared to the settlement figure?

I have had 2 x Yeti on PCP finance and in both cases the trade in value did not cover the settlement value so I just handed them back. They were both under the mileage limit. I have since had 1 x Yeti and currently a Karoq on PCH which works out much cheaper over 3 years than PCP and I just hand back the car at the end of the contract. Also, PCH includes the Road Tax.

Edited 21 November, 20214 yr by john999boy
OP typo.

You can access your terms and alter your mileage and therefore payments (assuming you have your PCP with VW finance) on the VW Finance website. Or you could phone and speak to someone there.

 

But you can work out how much you will have to pay at the end for over mileage (estimate anyway). The price per mile will be in your contract. You can then compare if you will be better off paying as you go or wait until then end of the contract if you choose to go that way.

On 21/11/2021 at 16:49, mistac said:

A question for any of you with pcp expertise !

I am aware of the  basic principles of a PCP as I have had many 😀. One thing I have never understood though is if you only really have the intention of trading the vehicle in to either a dealer or the likes of wbac, motorway etc as opposed to the option of returning to the lease company, is there are any point setting it up with a higher (even if it is more realistic) annual mileage and paying more per month? If I understand it correctly, if I set a lower annual mileage I pay less per month so isn’t it better to do this and then just receive whatever the then market value is once it is traded in via the above routes or have I misunderstood?
 

The reason I ask is for the first time in my pcp history, I may go over the annual mileage set by 1-2k per year. I am in first year of a four year pcp.
Therefore, do I 

a) renogotiate mileage with lease company and pay more month

b) stick with mileage limit and pay whatever mileage penalty is if I choose to hand it back to lease company

c) trade it in as above at the relevant point and just take a chance on the trade in value compared to the settlement figure?

 

hope this isn't too late to be of assistance

 

a) I'd say it's very, very unlikely you can renegotiate the mileage once you have signed the paperwork. But don't forget, if you pay less per month due to your claimed, likely low mileage, there is an adjustment amount owed to compensate this if your final, accumulated  mileage is higher.

b) A car isn't leased on a PCP, although it feels like it. It's really just an HP agreement, but dressed up in a funny way with the big balloon at the end. 

c) With a PCP you can sell, trade, keep or hand back the car at the end of the term. In fact, you can sell it at any time as long as the outstanding finance is covered (if there is equity in the vehicle, you get a nice cheque for the difference). If the car is in negative equity ie not worth what you still owe, you simply hand the car back at the end of the agreement and walk away (assuming the car is in decent condition). You can hand the car back at any point once you have paid off half the total amount too, the figure you need to hit is usually quoted in teeny weeny writing in your finance doc.  

 

In general, it's a good idea to set your annual mileage at either exactly your expected mileage, or better still, just slightly below this figure. This is because if you sign up for 10k a year, but actually do 9k, then if your car isn't worth what you still owe at the end of the term (negative equity) then you will have overpaid for the car whilst it's been in your care. If you actually do slightly more than miles than you signed up for and the car is in negative equity, then you still have to pay a small adjustment figure. The cost/mile is quoted somewhere in your financial agreement. Thus ensuring you pay a fair price for the usuage. 

 

Of course at the moment, used cars are experiencing a huge uplift in value, especially ones only a few years old in nice condition. At the moment, the average figure in Europe is quoted at somewhere around 20% above prices pre lockdown, for similar cars.