Mercedes Benz early voluntary termination query with Mortimer Clarke solicitors

Manxman_in_exile

bettasurveyor said:

There’s no provision for excess mileage charges in the law, so in theory, you can’t be charged for exceeding your mileage allowance. However, if you exceed the pro-rata mileage allowance, you can expect the finance company to come after you for an excess mileage penalty.

...

That's nonsense surely!

There may be no specific statute providing for these* charges, but there doesn't need to be - it's just basic contract law.

Your argument is in principle the same as agreeing to buy 1000 widgets at 25p per widget, but then taking 2000 and arguing that you only owe the seller the same amount of money as for 1000.

There's a reason why you get a lower quote if you under-estimate your annual mileage.  If you don't want excess charges, don't under-estimate.

*  Are you getting confused with unenforceable contractual penalty charges?

Grumpy_chap

This kind of question has come up several times in the forum.

VT is permitted once the total paid to the finance company is equal to at least half of the total payable under the agreement.  Including finance charges and balloon payment.  On a PCP, it means that the VT point is usually only reached well towards the end of the terms (because of the percentage of the total held back as the balloon payment).

Every time the question comes up, the matter of whether excess mileage charges are applicable is debated with people strongly on either side.  Unfortunately, I can't recall a thread where anyone has been able to come in with a clear and definitive legal position.  

The question of damage also comes up relatively frequently, but that is met with a more-universal acceptance that damage is payable over and above VT.

So, on the question of VT and mileage charges this forum seems unable to give an answer.  It may well be that the answer actually varies depending upon the specifics of each case.

MobileSaver

Manxman_in_exile said:

That's nonsense surely! ...  it's just basic contract law.

Voluntary Termination is a quirk of the Consumer Credit Act 1974 and because that is statute law it overrides contract law.

Here's one example from 2018 where the consumer won against the finance company trying to claim excess mileage (see post 42 on page 3 for a detailed explanation of how the consumer won.)

Legal Beagles VT excess mileage

Grumpy_chap

Since my earlier post, I had a thought.

PCP is nothing more than a finance product.
As is HP and personal loan.

Why should VT on PCP be treated differently to VT on HP?

If an individual buys a car on HP, does 500k miles, reaches the point that the 50% VT is reached, the individual can return the car, end the credit and no more to pay.  There is no excess mileage because no mileage referenced.

MobileSaver

Grumpy_chap said:

PCP is nothing more than a finance product. As is HP and personal loan.

Why should VT on PCP be treated differently to VT on HP?

If an individual buys a car on HP, does 500k miles, reaches the point that the 50% VT is reached, the individual can return the car, end the credit and no more to pay.  There is no excess mileage because no mileage referenced.

VT is treated exactly the same whether PCP or HP however it does not apply to personal loans or contract hire.

The reason that excess mileage per se is unenforceable when you VT is because the excess mileage liability only occurs following the contract being terminated and the law says you only have to pay "any liability accrued before termination".

Dealer/lenders could get around this by checking mileage annually and charging accordingly but they've taken the decision not to; presumably because 1) it would be an unnecessary extra cost in 90% of cases and 2) they'd have to reimburse if the consumer subsequently bought the vehicle.

visidigi

I think alot of this comes down to just 'how over' your allowance you are.

£6500 for damage and mileage seems a heck of alot. So just what are the numbers involved here? 

shiraz99

bettasurveyor said:

I found this on the car expert website (see above) does anybody know of someone who has WON or LOST in court battling excess mileage on a voluntary termination pcp ?

There a couple of cases out there with the result going either way. Unfortunately, district court cases don't set precedent and afaik the law regarding this has never been tested in the higher courts.

There's a whole section regarding VT on the legal beagles forum - Vehicle Finance and Issues - LegalBeagles Forum

shiraz99

MattMattMattUK said:

bettasurveyor said:

I found this on the car expert website (see above) does anybody know of someone who has WON or LOST in court battling excess mileage on a voluntary termination pcp ?

No, but that post above makes no sense and the provision for "excess mileage charges" are within the legal contract, they do not need a specific provision in law. The costs and calculation will also be set out in the contract which you agreed to when you took out the PCP. It sounds like it was written by an idiot with no understanding of the law. 

Unfortunately you don't seem to understand it either. The terms of any contract leading up to the VT, which is a legal right, are irrelevant. The only liability for the car owner is to hand the vehicle back in a reasonable condition, which is why the whole excess mileage issue is a bit of a grey area as it can be argued that excess mileage doesn't necessarily make the condition of the car unreasonable.

shiraz99

Grumpy_chap said:

Since my earlier post, I had a thought.

PCP is nothing more than a finance product.
As is HP and personal loan.

Why should VT on PCP be treated differently to VT on HP?

If an individual buys a car on HP, does 500k miles, reaches the point that the 50% VT is reached, the individual can return the car, end the credit and no more to pay.  There is no excess mileage because no mileage referenced.

It's treated exactly the same. PCP is just another form of Hire Purchase.

Nearlyold

shiraz99 said:

Grumpy_chap said:

Since my earlier post, I had a thought.

PCP is nothing more than a finance product.
As is HP and personal loan.

Why should VT on PCP be treated differently to VT on HP?

If an individual buys a car on HP, does 500k miles, reaches the point that the 50% VT is reached, the individual can return the car, end the credit and no more to pay.  There is no excess mileage because no mileage referenced.

It's treated exactly the same. PCP is just another form of Hire Purchase.

Actually that's not strictly correct, a PCP can be a form of Hire Purchase (and most probably are), it can also be a form of Conditional Sale (which can also be VT'd) in addition a PCP can be a form of Fixed Sum/Term loan - (basically a Personal Loan with a Balloon which does not have VT rights). Santander for example only use Conditional Sale or Fixed Sum/Term Loan for their PCP's.

For the fixed sum loan they provide the PCP "hand back" element by agreeing to purchase the vehicle back at the end of the term via an agency agreement with the price paid dependant on Mileage & Condition - if the vehicle is within the agreed mileage allowance and "good" condition the amount paid will be equal to the amount (Balloon) of the loan still outstanding at the end of the term.