PCP Advice

dorrian22

Hi,
This is my first time posting so please move the post if its in the wrong section!
I currently have a car with Ford on PCP starting in Sept 2018 at £195 per month for 36 months and 6000 miles per annum (19000 agreement). I'm now 18 months in and due to a change in job it's already done 27000, and if it carries on at the same rate, it will be at 54000 when I hand it back, therefore 35000 miles over at a cost of £0.06p*35000 = £2100.
It is also a petrol therefore not the most economical. My settlement figure is £10490 and I can pay £3800 to leave now, but I'm not sure if that would include or exclude the current excess mileage charge and whether that is current miles over or estimated total miles over?
I guess I'd like some advice as to whether get rid of the car now and buy a car to 'run into the ground' which is a diesel - thinking maybe a 16/66 plate BMW 1 Series with around 45k miles, or stick it out with this car and just pay the fee? My circumstances aren't likely to change before the agreement ends so the chances of the total miles being 54000 are high.
Thanks in advance, and look forward to any responses.
Dorrian22

AdrianC

Yes, PCP settlement includes mileage pro-rata'd. So they'd be expecting 9k miles on it now.

If you're asking about VTing, rather than a settlement figure, then you'd need to pay up to 50% of the total agreement amount including balloon. There is no definitive legal position on mileage overage - they will certainly try to enforce it, some court cases have gone each way on whether it is enforceable.

How much per mile do you think you're likely to save in fuel over the remaining term?

Mercdriver

I doubt it would be as much as 2k.

treeroy

Mileage is pro rata as said above. 18 months into contract, your mileage limit is 9,000 miles. yOu have done 27,000 so you would have 18,000 mileas over the limit. What is the charge, 6p / mile ? (And check that it includes VAT..!)
If it's only 6p then you will be chagred £1080 for mileage.

Goudy

Pay the settlement now and you'll be paying more than the car is worth, that £10,490 figure is based on the car having 13.5 thousand miles on it, not the 27 it has now.
Pay £3800 and VT it and you're £3800 down plus they'll chase you for the £1000 excess mileage (whether it's legal or not) and you'll have no car.
Keep it until the end and hand it back and they'll chase you for the £2000 excess mileage (legally) and you'll have no car.

Keep it, keep paying the monthly and keep using it and in the meantime save for the GFV in 18 months time.
When it's due pay off the GFV and either keep it and run it for as long as you can or trade it in.
If you do trade it in, this is when you'll take any financial "hit" for the excess mileage, but you'll be free to haggle your next deal and hopefully push for a good trade in deal or money off your next.

dorrian22

Goudy said:

Pay the settlement now and you'll be paying more than the car is worth, that £10,490 figure is based on the car having 13.5 thousand miles on it, not the 27 it has now.
Pay £3800 and VT it and you're £3800 down plus they'll chase you for the £1000 excess mileage (whether it's legal or not) and you'll have no car.
Keep it until the end and hand it back and they'll chase you for the £2000 excess mileage (legally) and you'll have no car.

Keep it, keep paying the monthly and keep using it and in the meantime save for the GFV in 18 months time.
When it's due pay off the GFV and either keep it and run it for as long as you can or trade it in.
If you do trade it in, this is when you'll take any financial "hit" for the excess mileage, but you'll be free to haggle your next deal and hopefully push for a good trade in deal or money off your next.

Thanks all - very helpful. Do i have to pay the GFV/excess miles if i don't do they have legal power to take to court etc, or can I simply say I made you aware and you did nothing or didn't even note it. 
Would it go on my credit report if i don't pay it and ignore it? 

Goudy

They only care about the excess mileage if you hand it back to them at any point, either at the end of the contract or VT it (voluntary termination) .
If you settle the finance early or pay the GFV at the end of the contract, they won't care if it has a million miles on it, it's yours.

If you hand it back at the end, you signed a contract that you will pay for any excess mileage and damage beyond normal wear and tear, so you're bound by that contract to pay them.

If you've paid 50% or more you can legally VT it. This means you can legally just hand it back the the finance company and finish the finance contract.
It's a bit of a grey area when this comes to VT and excess mileage as they work it out pro rata. Legally they can't charge you but this is obviously open to abuse and I am sure they will do everything they can to recover any loss they incur because of it, so expect lots of threats and nasty letters and they might even try and bump up some damage charges to try and cover the loss.

I know last year Peugeot/Citroen got caught out on some cheap PCP deals they offered a few years ago, the cars that came back didn't make they prices in auction and they went heavy on the owners that handed them back to try and recoup as much as possible.

If you VT it, you should not damage your credit rating but you might damage your relationship with the finance company if you try and use them again.

https://www.thecarexpert.co.uk/car-finance-voluntary-termination-pcp-hp/2/#mileage

dorrian22

Goudy said:

They only care about the excess mileage if you hand it back to them at any point, either at the end of the contract or VT it (voluntary termination) .
If you settle the finance early or pay the GFV at the end of the contract, they won't care if it has a million miles on it, it's yours.

If you hand it back at the end, you signed a contract that you will pay for any excess mileage and damage beyond normal wear and tear, so you're bound by that contract to pay them.

If you've paid 50% or more you can legally VT it. This means you can legally just hand it back the the finance company and finish the finance contract.
It's a bit of a grey area when this comes to VT and excess mileage as they work it out pro rata. Legally they can't charge you but this is obviously open to abuse and I am sure they will do everything they can to recover any loss they incur because of it, so expect lots of threats and nasty letters and they might even try and bump up some damage charges to try and cover the loss.

I know last year Peugeot/Citroen got caught out on some cheap PCP deals they offered a few years ago, the cars that came back didn't make they prices in auction and they went heavy on the owners that handed them back to try and recoup as much as possible.

If you VT it, you should not damage your credit rating but you might damage your relationship with the finance company if you try and use them again.

Great thanks - so its a 36 month agreement, so I could legally VT at month 35 and walk away for free?
That would be way over the 50% paid. 
Am I understanding correctly? 

treeroy

dorrian22 said:

Goudy said:

Pay the settlement now and you'll be paying more than the car is worth, that £10,490 figure is based on the car having 13.5 thousand miles on it, not the 27 it has now.
Pay £3800 and VT it and you're £3800 down plus they'll chase you for the £1000 excess mileage (whether it's legal or not) and you'll have no car.
Keep it until the end and hand it back and they'll chase you for the £2000 excess mileage (legally) and you'll have no car.

Keep it, keep paying the monthly and keep using it and in the meantime save for the GFV in 18 months time.
When it's due pay off the GFV and either keep it and run it for as long as you can or trade it in.
If you do trade it in, this is when you'll take any financial "hit" for the excess mileage, but you'll be free to haggle your next deal and hopefully push for a good trade in deal or money off your next.

Thanks all - very helpful. Do i have to pay the GFV/excess miles if i don't do they have legal power to take to court etc, or can I simply say I made you aware and you did nothing or didn't even note it. 
Would it go on my credit report if i don't pay it and ignore it? 

Yes. It will be written into your finance contract that you have agreed to pay the company £0.06 for each extra mile; so if you ended the contract (handed the car back) and refused to pay them the agreed mileage charge, you'd be in violation of the contract. You legally owe them the mileage charge unfortunately. There's not a way around it... unless  like said above you bought the car off the finance company but that's a completely separate arrangement.

And even then, the value you buy the car off them for is affected heavily by the mileage you've put on it anyway.

neilmcl

treeroy said:

dorrian22 said:

Goudy said:

Pay the settlement now and you'll be paying more than the car is worth, that £10,490 figure is based on the car having 13.5 thousand miles on it, not the 27 it has now.
Pay £3800 and VT it and you're £3800 down plus they'll chase you for the £1000 excess mileage (whether it's legal or not) and you'll have no car.
Keep it until the end and hand it back and they'll chase you for the £2000 excess mileage (legally) and you'll have no car.

Keep it, keep paying the monthly and keep using it and in the meantime save for the GFV in 18 months time.
When it's due pay off the GFV and either keep it and run it for as long as you can or trade it in.
If you do trade it in, this is when you'll take any financial "hit" for the excess mileage, but you'll be free to haggle your next deal and hopefully push for a good trade in deal or money off your next.

Thanks all - very helpful. Do i have to pay the GFV/excess miles if i don't do they have legal power to take to court etc, or can I simply say I made you aware and you did nothing or didn't even note it. 
Would it go on my credit report if i don't pay it and ignore it? 

Yes. It will be written into your finance contract that you have agreed to pay the company £0.06 for each extra mile; so if you ended the contract (handed the car back) and refused to pay them the agreed mileage charge, you'd be in violation of the contract. You legally owe them the mileage charge unfortunately. There's not a way around it... unless  like said above you bought the car off the finance company but that's a completely separate arrangement.

And even then, the value you buy the car off them for is affected heavily by the mileage you've put on it anyway.

That all depends. If you let the contract run to conclusion then yes you are liable for anything agreed in the contract, if you "end the contract" via VT then that's not the case as the contract will effectively be moot and your only liability is to hand the car back in a reasonable condition, after of course paying 50% of the total amount payable.

dorrian22

So can I VT at 35 months as per my above post simply to avoid fees or will they cotton on? Can they still request the money for the excess miles if I VT?