Rejection on a vehicle

sexysi

Hi,
Need some advice on what I can claim back.
At the moment i am going through the process of rejecting a PCP vehicle.
Now the Finance company have come up with some figures as they are financing the vehicle.
It looks like the rejection will go through but wanted to get views on what I can get back.
The vehicle was £13,500 brand new, it has £500 of dealer added extras which I paid for not on the PCP contract. So the vehicle to buy would be £14,000
Now I have had it for 17 months, 3 months of which the vehicle has been in dealers being repaired. I put down £2,500 deposit on it and have been paying £125/ month interest free for 17 months.
But I have gone over my contracted mileage by 10,000 miles.
I am rejecting under the consumer rights act 2015, as it has failed twice on the same dangerous fault.
My question is I basically own £2,500 + £500 + £2,125 of the vehicle which equates to £5,125.
But the finance company is looking to charge me nearly £6,000 for going over the mileage limit.
As this is a rejection, i know that i will have to pay for some money for use, but £6,000 is almost half the value of the vehicle.....and they are saying i will owe them £800.

Surely as a rejection, this is not like giving the bike back.... They have not taken into account any interest on my payments that i would have got if i stuck the money in the back

Hopefully someone can help me out here.

Thanks Simon

AdrianC

sexysi wrote: »

The vehicle was £13,500 brand new, it has £500 of dealer added extras which I paid for not on the PCP contract. So the vehicle to buy would be £14,000
Now I have had it for 17 months, 3 months of which the vehicle has been in dealers being repaired. I put down £2,500 deposit on it and have been paying £125/ month interest free for 17 months.

Did that £2,500 include the extras? If not, then you put down £3k initial payment, not "£2,500 plus I own the extras". The extras are part of the package, but don't affect the balloon, because they're assumed to have zero value at the end of the term.

My question is I basically own £2,500 + £500 + £2,125 of the vehicle which equates to £5,125.

No, you do not. You own nothing. None of it. Nada. Not so much as a tyre valve dustcover.

But I have gone over my contracted mileage by 10,000 miles.
...
But the finance company is looking to charge me nearly £6,000 for going over the mileage limit.

60p/mile? That's ridiculous. But... if it was in the contract when you took the bike on, then you knew about it and accepted it, and did that mileage anyway in full knowledge of what it'd cost you.

As this is a rejection, i know that i will have to pay for some money for use, but £6,000 is almost half the value of the vehicle.....and they are saying i will owe them £800.
...
Surely as a rejection, this is not like giving the bike back.... They have not taken into account any interest on my payments that i would have got if i stuck the money in the back

I don't think you understand how a PCP works...

You are hiring the vehicle from them. The terms of that deal include an agreed amount of mileage. You pay an up-front payment (£3,000 in your case), then you pay interest on the entire remaining value of the vehicle, plus you repay some of the borrowed capital over the term. That's structured so that at the end of the term, the remaining capital is equal to the expected depreciated value, allowing for the expected condition and mileage. You can then hand it back or pay the remaining amount to buy it from them.

You're rejecting it. As you say, this is separate from the finance. After a year and a half, you would not expect to get your full money back - you would expect to pay for the usage you've had from it. And that would normally be the rough depreciation over that period.

The initial depreciation is alway steepest - so you're going to be "in negative equity" anyway, even before you take the higher mileage into account.

sexysi

I think the rate was .24p a mile, I need to check my contract tonight, so are we saying the only money I owe would be 10,000miles x .24p which equates to £2,400 which I was expecting.
But then what would happen to the £500 I paid the dealers for the extras I can't use. Plus the other £2,125 in payments.
The initial deposit was £2,500 not 3k.
So worried about being in negative equity, due from a faulty vehicle and no fault of my own.

I dont mind walking away with nothing but to owe £800 on a vehicle that nearly killed me twice, DVSA report already filed and being investigated. Seems a con.

Thanks for your quick reply.

sexysi

Just to add to this if I had paid £14,000 cash for the vehicle, surely under rejection I would get 14k minus some for use. But who gauges what that value for use is?

cheers si

BoGoF

How long was the PCP over?
What was the mileage allowed?
What is the mileage now?

The allowed mileage will need to be pro-rata for the period you had the car.

BoGoF

sexysi wrote: »

Just to add to this if I had paid £14,000 cash for the vehicle, surely under rejection I would get 14k minus some for use. But who gauges what that value for use is?

cheers si

You didn't pay cash for it though.

sexysi

3yrs pcp @ 0 %
£2,500 deposit.
12,000 miles allowed.
22,000miles now.
I was going to buy it at the end of the term...
So the dealer said just put this in as a mileage. Little did I know the Bike was going to be a bad..

si

regards simon

AdrianC

sexysi wrote: »

I think the rate was .24p a mile, I need to check my contract tonight, so are we saying the only money I owe would be 10,000miles x .24p which equates to £2,400 which I was expecting.

So where on earth is the £6k figure coming from?

But then what would happen to the £500 I paid the dealers for the extras I can't use. Plus the other £2,125 in payments.
The initial deposit was £2,500 not 3k.

The £500 was a 100% up-front initial deposit for the value of the extras, because they are assumed to have no value at the end of the term.
And the payments are the interest on the £11k you borrowed, plus repayments towards it.

Let's look at the sums over it all...
£13,500 base plus £500 options.
£14,000 total purchase price.
£2,500 plus £500 initial payment.
£11,000 to finance.
Assuming 3yr term, 36 x £125 = £4,500 repayments over term.
0% APR PCP, you said? So £0 interest = £11,000-4,500 repaid over term = expected value of £6,500 at 3yo. If you want to own it at 3yo, you buy it off them for £6,500. (If it's worth more, and you want to trade it in, then the dealership pays the £6,500 on your behalf.)

Otherwise, you hand it back to the owner, the finance house, and walk away. You would need to pay for any mileage above the contracted amount, at 24p/mile. If you've gone over by 10k in 17mo, then taking that pro-rata would give you an expected overage of just under 22k, so about £5,100 for the excess mileage - so it'd have to be effectively worthless for you not to simply buy it for the balloon amount... And that's before we consider how much extra mileage you'd have put on it in the 3mo it's been in the workshop (during which, I presume, they provided you with a courtesy vehicle?)

sexysi wrote: »

Just to add to this if I had paid £14,000 cash for the vehicle, surely under rejection I would get 14k minus some for use. But who gauges what that value for use is?

The market, via depreciation. In effect, you're selling it back to the dealer for the value unblighted by the issues.

BoGoF

sexysi wrote: »

3yrs pcp @ 0 %
£2,500 deposit.
12,000 miles allowed.
22,000miles now.
I was going to buy it at the end of the term...
So the dealer said just put this in as a mileage. Little did I know the Bike was going to be a bad..

si

regards simon

12,000 in total for the 3 years? If so why when you clearly do more mileage?

If it was 12,000 for the 3 years then you are more than 10,000 miles over after 17 months in. At 17 months your allowance would be 17/36 x 12,000 = 5667. At 22,000 miles now you are over 16,000 miles over.

AdrianC

Well spotted, BoGoF - and then remember the three months it's spent in the workshop...

So that's 22k in 14mo of actual use, 1,570 miles/month. Which, at the end of term if all had been reliable, would be 56,570 - so, at 24p, about £10,700 in excess mileage...! Indeed buying it would be the cheap solution.

I wonder if that kind of mileage is contributory to the issues, on a bike that's clearly not viewed by the market as intended for heavy use? It's certainly something that needs to be taken into account in the rejection decision.

This thread's a good warning marker about why low-mileage PCPs aren't a good plan for those planning to do high mileages and simply buy at the end. The same issue would have reared its head with a write-off, too, where the payout would take account of the heavy mileage but the finance settlement wouldn't.

sexysi

So in effect I do owe them £800 to walk away, with no bike.
Otherwise I still have to pay £6,500 end of term, plus £2,125 which is 17 months of payments. so in effect my choices are £800 or £8,625.

In the situation PCP is a crap way of buying a vehicle. Its ok if nothing goes wrong, but if it does then im screwed. At least i know that the manufacture has spent over 10k fixing the problems and they have mad nothing on it. Im just glad my new bike isnt PCP.

Thanks Si