PCP mileage

Crumble_

Done a quick search but not found anything ...

Does anyone know if you go over your mileage allowance after the 3 years say, but you are keeping the car, buying it with the ballon payment, do you have to pay the excess mileage charges?

AdrianC

No. The mileage and condition charges only apply if it goes back.

debtdebt

No you don!!!8217;t.

Crumble_

I take it the balloon payment goes up at the end with you selecting less miles at the start?!

facade

Crumble_ wrote: »

I take it the balloon payment goes up at the end with you selecting less miles at the start?!

Yes.


The balloon is the guaranteed final value- what the finance company think the car is going to be worth. You pay the difference between the new (purchase price) value and this final value, plus interest & fees as your monthly payments.




So if you reckon to do 15,000 miles over the 3 years, the car would be worth more than if it had 120,000 miles on it, and the GFV for the 15,000 miler would be high, with low monthly payments.

neilmcl

facade wrote: »

Yes.


The balloon is the guaranteed final value- what the finance company think the car is going to be worth. You pay the difference between the new value and this value, plus interest & fees as your monthly payments.




So if you reckon to do 15,000 miles over the 3 years, the car would be worth more than if it had 120,000 miles on it, and the GFV for the 12,000 miler would be high, with low monthly payments.

Where have you got this idea from? The Balloon/GFV is fixed and is all the OP will have to pay regardless of whether he has excess mileage on it or not!

Edit: I think I see the confusion, you think the OP was asking if the amounbt of miles selected has an affect on the GMFV when the finance deal is arranged. I think the OP is asking whether the balloon is likely to go up because he has excess mileage. I could be wrong.

AdrianC

neilmcl wrote: »

Where have you got this idea from? The Balloon/GFV is fixed and is all the OP will have to pay regardless of whether he has excess mileage on it or not!

No, if you figure on putting fewer miles on the car, the balloon at the end of the PCP will be higher - because they'll expect the car to be worth more. The monthlies will be higher, because you're paying for more depreciation over the term.

And the more the balloon goes up, the more interest you pay, since you're borrowing the entire balloon for the duration of the PCP.

neilmcl

AdrianC wrote: »

No, if you figure on putting fewer miles on the car, the balloon at the end of the PCP will be higher - because they'll expect the car to be worth more. The monthlies will be higher, because you're paying for more depreciation over the term.

And the more the balloon goes up, the more interest you pay, since you're borrowing the entire balloon for the duration of the PCP.

See my edit above.

Nasqueron

Any which way you do your balloon and monthly payments, if you keep the car you pay the total agreed sum one way or another

I did well over my mileage agreement on PCP but keeping the car and when I paid my balloon it was as agreed, mileage is irrelevant

AdrianC

Mileage is relevant, in that it affects the amortisation curve of the amount you repay, which affects the total interest repaid.

Let's say you borrow £15k (balloon + amount repaid) at 5% APR over two years.

You look at the options - a lower mileage means £10k balloon, a higher mileage means £5k balloon. The mileage you're planning on covering is irrelevant, because you know you want to buy the car at the end.


The £10k balloon gives monthlies of £261 with £1264 total interest, while the £5k balloon gives a much bigger monthly - £460 - obviously, since you're repaying £200/mo more of the borrowed money... And that means total interest of £1029. You can pay 22% more total interest if you wish, but...

Crumble_

0% so winner on that front.

No worries, thanks guys!