PCP - Miles don't matter

motorguy

loskie wrote: »

Of course they matter, he is treating you like an idiot. Ask him to put it in writing backed up by the dealer principal.

https://www.moneyadviceservice.org.uk/en/articles/financing-buying-car-personal-contract-purchase-pcp

The salesman is not wrong.

The only time the mileage clause on the PCP contract matters is if you're handing the car back to the finance company at the end of the term [OR arguably, if you are VTing it but thats another argument].

AdrianC

motorguy wrote: »

Really? So people dont ever

• Part exchange the car in advance of the final payment being due
• Part exchange the car when the final payment is due

Neither of which involve the person actually paying the balloon.

Somebody's paying the balloon to the finance company in the borrower's name, since the car ain't going back to them...

iwb100

Miles matter if you hand the car back at the end. And lets be clear there are reasons you may want to do that EVEN IF your intention is to merely trade it in for another PCP deal.

If your car is in negative equity (worth less than the GFMV) you may find that a trade is not in your favour as the dealer will likely add the excess to your new PCP deal. So you'd be better off handing the car back and simply starting again. However, if you've racked up excess miles you will then have to pay for them.

What you can do is work out how much the PCP deal will cost in total with the correct mileage vs how much the extra miles will cost.

For example if it is 6p per extra mile multiply that by the number of miles extra and you can see what you will owe at the end of your term should you hand the car back.

Dealers should not be telling you to put a false mileage on a deal because a) they won't care if you end up in negative equity b) they won't have to pay the excess charge if you hand the car back.

Robby1988

I think it’s fair to say that setting the mileage lower than what you will actually do, is essentially removing the advertised third option of a PCP which is to “hand the car back with nothing else to pay” at the end of the agreement. Nobody is going to want to fork out a whopping bill for excess mileage just to give a car back and walk away with nothing.

If you are confident enough to know that your circumstances won’t have changed in 3/4 years & the option of giving the car back and walking away is something you will never entertain - then by all means crack on with a low mileage allowance. I can only offer advice based on my own experience, which would be not to reduce your options.

iwb100

Robby1988 wrote: »

I think it’s fair to say that setting the mileage lower than what you will actually do, is essentially removing the advertised third option of a PCP which is to “hand the car back with nothing else to pay” at the end of the agreement. Nobody is going to want to fork out a whopping bill for excess mileage just to give a car back and walk away with nothing.

If you are confident enough to know that your circumstances won’t have changed in 3/4 years & the option of giving the car back and walking away is something you will never entertain - then by all means crack on with a low mileage allowance. I can only offer advice based on my own experience, which would be not to reduce your options.

But if the plan is to "trade" for a new PCP deal before current deal ends the risk is that you are in negative equity (a greater risk with increased miles) and therefore cannot have to add money onto the next deal....that is something to be avoided.

If the plan is to buy the car then again there will be no penalties but potentially you have to buy it for more than it is worth.

I know a fair few people on PCPs who are in break even or -ve equity territory and its not a great place to be when you need a car and have a choice of buying it for more than its worth or taking the loss and adding the cost onto a new one.....

Nasqueron

flyingstart wrote: »

Thank you all for the comprehensive replies.

I totally see where people are coming from and it's easy to be 'lured' in with the idea you could save yourself unto £15 a month really (which is a considerable amount when the car is £150/60 a month).

It's a tricky grey area I think, something which I can see why a lot of people fall for.

It's not a grey area, the guy is straight up lying and sneaking around the edges - the GMV is affected by the mileage.


If you buy at the end, it doesn't matter. Sometimes if you VT it, it doesn't matter. If you want to trade in at the end or return it, it does

foxy-stoat

Nasqueron wrote: »

It's not a grey area, the guy is straight up lying and sneaking around the edges - the GMV is affected by the mileage.


If you buy at the end, it doesn't matter. Sometimes if you VT it, it doesn't matter. If you want to trade in at the end or return it, it does

Lets not forget about the unforeseen....your car gets written off with higher mileage than stated, you lose all control then and are totally donald duck'ed.

AdrianC

Nasqueron wrote: »

It's not a grey area, the guy is straight up lying and sneaking around the edges - the GMV is affected by the mileage.

It's affected by the mileage you contract for. It's not affected by the mileage you cover.

motorguy

AdrianC wrote: »

Somebody's paying the balloon to the finance company in the borrower's name, since the car ain't going back to them...

Adrian - not sure why you extracted one sentence of mine from its context to try to make some sort of attempt at a point, but to reiterate i was saying that the individual themselves rarely actually pays the residual, because the car gets traded in.

You seem to be chosing to misinterpret that and then argue about semantics.

Anywhere where PCP end options are explained almost always state :-

* Hand the car back
* Pay the residual
* Trade the car in

So perhaps, if you wish to continue this "argument" you take it up with Ford, BMW, Mercedes, etc and their advertising.

AdrianC

motorguy wrote: »

not sure why you extracted one sentence of mine from its context

Because it was the only bit I was replying to.

but to reiterate i was saying that the individual themselves rarely actually pays the residual, because the car gets traded in.

As far as the financier is concerned, there are only two things happening at the end of the contract.
The car goes back to them (excess mileage payable)
The car gets bought from them for the balloon (excess mileage not payable)

It's that simple.