Hire Purchase Agreement Mileage Issue

rooney005

Hi all,

In need of some advice.

Just before my girlfriend and I met, she started a 36 month hire purchase agreement with Honda in January 2012. I wanted to see the agreement as she was interested in changing her car early. So I started looking through the paper work to see what it would cost to end it early or throw it in for something else when I noticed the "excess mileage" clause within the contract (something I am familiar with).

She bought the car, a 2011 Honda Civic, with 9,000 miles on it and she distinctly remembers an agreed annual mileage being stated as 10,000 per year (pretty standard i thought) so in theory she wouldn't incur and mileage penalties so long as she didn't exceed 39,000 at the end of her 3 year agreement. However with that said, the small print in the contract states the total mileage she would need to exceed to incur a penalty is 24,667??? This means that across the 3 years she would have a mileage cap of 15,666 miles (5,222 per year).

She's now 16 months into her agreement and the car is now showing 28,500, so with her excess mileage charge being 2.67 pence per mile shes already over and incurring more costs...

Question 1: If we were to keep the car for the rest of the agreement, is there anything we can do to challenge the mileage cap as it seems different to what was verbally discussed?

Question 2: She is only 16 month into her agreement, having already paid out £3,641.92. What do you estimate the cost of handing back the car early will be? I assumed a payment to bring the total payments up to 50% of the initial agreement plus any additional charges?? Is there anything we can do here??

Basic car finance details below.

Car Cash Price -12,145.00
Deposit - 2,000.00
Credit Amount Needed - 10,145
Charge for credit - 2,801.58
Total amount payable - 14,946.58
APR - 12.70%
Duration Months - 36
Acceptance Fee 1st Payment - 227.62
Monthly Fee - 227.62
End Payment Month 37 - 4,752.26
Garanteed future value - 4,663.26

Any help welcomed!!
Cam

rooney005

Just a quick update, they have quoted £8,230 as a settlement figure.

OddballJamie

A verbal agreement after 16 months, I would be surprised if the sales person remembers her, let alone can recall the conversation word for word.

Also at her current rate she is doing 14,625 miles a year, which would've resulted in an excess charge anyway with the 10k limit. Overall difference looks to be about £400 between 10k and 5.2k a year limit, which she may recover with the low GFV.

MEM62

Firstly, I would suggest that the finance is some kind of personal lease/finance plan as straight Hire Purchase is not normally subject to mileage agreements or buy backs.

The limitations on that contract don't look right to me. We have leased a brand new Civic on a four-year 48,000-mile deal for £250 per month so it sounds like to are paying way over the odds for a used car with such a severe mileage restriction.

rs65

rooney005 wrote: »

I wanted to see the agreement as she was interested in changing her car early.

Just trade it in.

rooney005

Hi all, more help on same issue needed.

We asked Honda if we could sell the car privately and pay off the contract that way before we sigend the car over etc. But they have said we can't? Anyone know of a reason why we cant do this?

I mean, how would they know we sold it privately if we pay off the finance at the same time as transfering ownership?

OddballJamie

Unless you pay the car off fully then wait a week for the systems to update, the car will not be HPI clear. Technically the finance company own the car until the final payment is made, so you can't sell it as you don't really own it.
You will also struggle to find anyone willing to buy a car privately that has finance owing under the promise that you will pay it off after they have paid you.

Either get a bridging loan to cover the finance outstanding on the car until you sell it or trade it in for another car and hope it's worth the same or more than the finance owing.