Excess milage PCP

mogbat975

Good morning everyone, bit of advice please.
We took out a PCP on a brand new Audi TT 2.0 just over 4 years ago on a 48 month contract at an Audi main dealership. At the time of signing the yearly mileage allowance was 5k. The sales rep at the time said don't worry about that as most people exchange their car after a couple of years for a different model. Any way after a couple of years we looked into changing it but Audi wanted 4k off us before we could exchange it for another model. Because we couldn't pay the 4k we kept it however that meant we were forced to drive it over the excess mileage. The car now has about 45k. Its in really good condition however I'm now worried about the excess mileage charge when the contract ends in 4 months. I've read that after the half way mark in the contract I don't have to pay it. is this correct? can anyone advise me on my options please.

AdrianC

Not quite.

After you've paid half of the total borrowed amount - including the balloon - you can "VT", voluntarily terminate the contract. This is a statutory right, and the financier can't say no.

There has been no legal precedent set as to whether excess mileage charges are enforceable or not on a VT. Some people say they aren't, lenders say they are. It has gone to court in the past, and some people have lost, some have won. Do you feel lucky?

Your monthly payments were based on you covering 20k in four years. You have covered 25k more than that. If your monthly payments were based on your actual mileage, you'd have been paying more each month. The balloon value is based on a 4yo/20k car - yours is now worth less than that, because of the higher mileage.

It only seems fair that you pay for the use you've had, doesn't it? And, after all, you've had four years to plan for this...

How much is the excess mileage rate? Would it work out cheaper to pay the balloon and then sell the car?

Cornucopia

OR...

Sell or trade in the car for what it's worth, and then get something else.

OR...

Pay the Balloon payment and carry on with the existing car as you are.

Mileage penalties ONLY come into effect when handing the car back to the Finance Company. Personally, I DID push back on penalty mileage when VTing, but given that only about 1000 miles was at stake (c. £70), I imagine the Company did not think it worth pursuing. 25K miles (maybe £2000+) I can definitely see them chasing.

First step for the OP is getting a settlement figure and a realistic valuation. From there, the least expensive option(s) can be identified.

motorguy

+1 to both posts above.

You'd probably "get away with" VTing a car with a couple of thousand miles extra, but 20,000+ miles they are going to pursue it. They will take it to County Court and theres a fair chance they'll win.

MEM62

Lesson number one. Alarm bells should ring anytime a car salesman says "don't worry about it."

I am struggling to accept that you were 'forced' to accrue the excess mileage. You knew what the limitation was and that clearly wasn't sufficient for your needs. Presumably the (considerable) charges for exceeding the contract mileage were detailed in your PCP agreement. You are not the first to find yourself in this situation and it is one of the mechanism's by which PCP puts people into a car that they could otherwise not afford. To be honest, PCP might work for some but it is not a product I particularly like.

I would imagine that the most cost effective option open to you is to meet the balloon payment and keep the car. I would expect that the excess milage cost will be substantial and the additional amount you would need to find on top of this to purchase the car outright might not be so large in comparison.

Cornucopia

Unless the penalty mileage rate is very, very low or there is genuine doubt over future usage, there is absolutely no point in entering a false low mileage estimate for PCPs and Leases. This should not be being pushed by the Dealership.

edit: I suppose it's worth the OP asking the Finance Company what their policy is on mileage penalties for VT, if they haven't already done that.

motorguy

Cornucopia wrote: »

Unless the penalty mileage rate is very, very low or there is genuine doubt over future usage, there is absolutely no point in entering a false low mileage estimate for PCPs and Leases. This should not be being pushed by the Dealership.

edit: I suppose it's worth the OP asking the Finance Company what their policy is on mileage penalties for VT, if they haven't already done that.

...although i think we can predict their answer.

AdrianC

motorguy wrote: »

...although i think we can predict their answer.

Quite.

"Would you prefer us to pay you the several thousand pounds for the 25k we've covered in your car over what we signed for, or are you cool with it?"

Broadyx

At the point you went in to try and change the car and they said "no we need 4k off you" did you not look into the option of increasing the annual mileage allowance? your monthly payments would have increased but you wouldn't be 25k over your limit now.

Herzlos

You'll need to check your paperwork, but google tells me it's about 6p/mile (which seems low to me), or about £1500 in additional mileage.


You can take the punt of VT and hope they don't pursue it, but you've put more than double the mileage on it so I suspect they would.


If it's immaculate condition and you like the car, it's likely much better to just pay the balloon and keep it for a bit longer - the finance company won't care about the mileage unless it's being returned.


If you're talking out a new PCP, make sure you get the mileage right

mogbat975

Excess mileage is 7p per mile and the balloon payment is about 16k