Personal Contract Hire

suzikenobi

I’m not sure if this is the right board but I hope so - if not please point me in the right direction.

I got a PCH in the middle of 2019 with an annual mileage allowance of 10K on a 36 month term. As a result of Covid and the national lockdown(s), I find myself in the position of having done less that 10k miles in total at the end of my term.

I recently found out (in the last week) that I would have been able to re-contract on my mileage as I was using significantly less than anticipated due to the impacts of covid 19. This would have materially reduced my monthly rental payments as the amount paid is calculated to account for mileage and the impact that will have on the residual value of the car.

My broker did not make me aware of this at POS nor did my lease company make me aware of this during the term
of my lease.

I’m  wondering if it would be worth asking them to calculate the difference in payments and refund this to me. I get that I signed up to a contract however, they have the option to re-contract on mileage, they didn’t make me aware of it and it feels like something they should have been proactive in discussing with customers as a result of covid/ national lockdowns etc.

I’d be really interested in people’s thoughts on this and whether anyone has made a request or complaint on this basis

Grumpy_chap

suzikenobi said:

I’m not sure if this is the right board but I hope so - if not please point me in the right direction.

I got a PCH in the middle of 2019 with an annual mileage allowance of 10K on a 36 month term. As a result of Covid and the national lockdown(s), I find myself in the position of having done less that 10k miles in total at the end of my term.

I recently found out (in the last week) that I would have been able to re-contract on my mileage as I was using significantly less than anticipated due to the impacts of covid 19. This would have materially reduced my monthly rental payments as the amount paid is calculated to account for mileage and the impact that will have on the residual value of the car.

My broker did not make me aware of this at POS nor did my lease company make me aware of this during the term
of my lease.

I’m  wondering if it would be worth asking them to calculate the difference in payments and refund this to me. I get that I signed up to a contract however, they have the option to re-contract on mileage, they didn’t make me aware of it and it feels like something they should have been proactive in discussing with customers as a result of covid/ national lockdowns etc.

I’d be really interested in people’s thoughts on this and whether anyone has made a request or complaint on this basis

No-one could have advised at POS that the contract could be varied because of COVID 19 before you took out the lease in 2019 - whoever heard of COVID then?

This is something where you can't lose anything by asking - they can only say "no", they might say "yes" though there is no reason for them to do so other than goodwill.

When does your current agreement expire?
What do you propose to do next for a car?
If you are looking to take a new agreement, the company might be able to do something of a "yes" in a way that reduces the cost of the next agreement rather than retrospective adjustment of the old agreement.

All of the above is on the basis of a PCH agreement as per your OP.

Is the agreement definitely PCH, or is it PCP?
If PCP, you have far greater built-in flexibility at the end of the term and that gives you more scope to realise the extra equity in the car over and above the balloon payment.

suzikenobi

Grumpy_chap said:

suzikenobi said:

I’m not sure if this is the right board but I hope so - if not please point me in the right direction.

I got a PCH in the middle of 2019 with an annual mileage allowance of 10K on a 36 month term. As a result of Covid and the national lockdown(s), I find myself in the position of having done less that 10k miles in total at the end of my term.

I recently found out (in the last week) that I would have been able to re-contract on my mileage as I was using significantly less than anticipated due to the impacts of covid 19. This would have materially reduced my monthly rental payments as the amount paid is calculated to account for mileage and the impact that will have on the residual value of the car.

My broker did not make me aware of this at POS nor did my lease company make me aware of this during the term
of my lease.

I’m  wondering if it would be worth asking them to calculate the difference in payments and refund this to me. I get that I signed up to a contract however, they have the option to re-contract on mileage, they didn’t make me aware of it and it feels like something they should have been proactive in discussing with customers as a result of covid/ national lockdowns etc.

I’d be really interested in people’s thoughts on this and whether anyone has made a request or complaint on this basis

No-one could have advised at POS that the contract could be varied because of COVID 19 before you took out the lease in 2019 - whoever heard of COVID then?

This is something where you can't lose anything by asking - they can only say "no", they might say "yes" though there is no reason for them to do so other than goodwill.

When does your current agreement expire?
What do you propose to do next for a car?
If you are looking to take a new agreement, the company might be able to do something of a "yes" in a way that reduces the cost of the next agreement rather than retrospective adjustment of the old agreement.

All of the above is on the basis of a PCH agreement as per your OP.

Is the agreement definitely PCH, or is it PCP?
If PCP, you have far greater built-in flexibility at the end of the term and that gives you more scope to realise the extra equity in the car over and above the balloon payment.

Thanks Grumpy_chap - I understand that they couldn’t have made me aware of the ability to vary the contract im the context of covid however, they could have made me aware that it was an option generally but didn’t. That seems important to me given the direct impact on monthly payments and feels like something that should be disclosed as part of the sales journey at some point. I suspect it isn’t as it directly impacts the margin of the leasing company.

It’s definitely PCH and not PCP.

You are correct in saying I have nothing to lose by asking.

Grumpy_chap

I don't think that PCH contracts can be varied in general.
The adjustment rates that some have reported relating to lower mileage because of COVID are probably mostly goodwill agreement rather than contractual obligations.

What does your contract say?

Are there any other clauses in the contract that were not specifically drawn to your attention at point of sale?

suzikenobi

Grumpy_chap said:

I don't think that PCH contracts can be varied in general.
The adjustment rates that some have reported relating to lower mileage because of COVID are probably mostly goodwill agreement rather than contractual obligations.

What does your contract say?

Are there any other clauses in the contract that were not specifically drawn to your attention at point of sale?

I (now) know for a fact that the mileage rates can be varied and re-contracted with the firm in question. It isn’t tied to covid, it is allowed on all of their leases but not communicated effectively either in the sale or product information. 

Grumpy_chap

If a reschedule for mileage is one of the clauses of the contract, then you would have had the information within the contract from the outset.

The sales person doesn't usually take a customer through every element of the agreement.  The customer needs to read the contract.

suzikenobi

Grumpy_chap said:

If a reschedule for mileage is one of the clauses of the contract, then you would have had the information within the contract from the outset.

The sales person doesn't usually take a customer through every element of the agreement.  The customer needs to read the contract.

Thanks Grumpy_chap I don’t think this line of discussion is getting me any further. I work in FS and understand the requirements around disclosures etc in the sales process. For me this feels like a pretty critical element of the product that should be discussed given the level of impact it has in the price of the lease. 

MrFrugalFever

Most PCH agreements can have mileage varied, there is normally a starting period whereby it cannot be altered and normally a finishing period where it can’t be altered (often 6 months prior to end of contract). How often it can be varied is largely down to the Contract Hire company.

This would have been in your contractual agreement that you signed.

PCH offers no flexibility as far as any form of ownership or equity is concerned and simply is just renting a car for an agreed period of time with estimated mileage and handing back.
The lower monthly payments reflect this.

If you wanted greater flexibility then you’re better off going for a PCP or HP whereby you can gain equity in the event of lack of mileage in most instances and have the right to sell your car.