Car issues - refund only after fair usage charge

Polish72

Any help or advice please. 

I bought a car in April with a £3000 credit card deposit and the rest on a PCP. Within a few weeks the car developed a number of faults (one of which was 'fixed' prior to purchase by the dealership). Since then the car has been in various approved garages a number of times for the issues to be rectified but so far there's no solution so I requested a refund from the dealership. They agreed that they would refund me but took the Motor Ombudsman's calculation for the vehicle and then took off a 'fair usage charge'. This results in a loss for me of around £2000.

As, there are two forms of transaction (credit card and finance) I'm not sure where I stand legally or if I should (or able to) claim the deposit back using Section 75 and the car not being fit for purpose. This would seem difficult to arrange around selling the car back to the dealership.

Any advice would be greatly appreciated. 

DullGreyGuy

S75 doesn't change the position, it just creates a second party you could go after... if it was over £30,000 then it isn't S75 but S75a which requires you to try and get a resolution with the supplier and can only go to the lender if the supplier fails to settle and would only apply to the PCP. 


Motor vehicles are different to other goods in that "use" can be deducted for any rejection of the goods after the short term right (1 month) expires whereas for other goods its only after the first 6 months have passed that use can be deducted. 


Looking at a random case on the Ombudsman's website it seems they use 45p/mile as the mechanism to calculate use. Is that the same mechanism they are prosing to use? How many miles have you done on the vehicle? 

Polish72

DullGreyGuy said:

S75 doesn't change the position, it just creates a second party you could go after... if it was over £30,000 then it isn't S75 but S75a which requires you to try and get a resolution with the supplier and can only go to the lender if the supplier fails to settle and would only apply to the PCP. 


Motor vehicles are different to other goods in that "use" can be deducted for any rejection of the goods after the short term right (1 month) expires whereas for other goods its only after the first 6 months have passed that use can be deducted. 


Looking at a random case on the Ombudsman's website it seems they use 45p/mile as the mechanism to calculate use. Is that the same mechanism they are prosing to use? How many miles have you done on the vehicle? 

Thank you for replying DGG. 

Their original calculation was from the government rate and was inferior to this, at a rate of 45p per mile so either the Ombudsman has calculated a better fate or the car retail price has changed. *the car was bought for under £30000 and the mileage I have done is around 5000 miles in the 6 months since purchase. Regards. 

DullGreyGuy

Current price for the car is irrelevant, it's a deduction from what you paid for it for use received. 

The 45p rate feels high to me given when its considered for taxation purposes it also covers the fuel though I know when historically looking at the AA/RAC calculations they almost universally had the 45p as being far too low for what it was supposed to be (bearing in mind I was never looking at cars doing 60+ mpg). I only saw one case so dont know if its the universally used rate or just happened to be it for that one case. 

A price per mile isn't too bad conceptually, arguably if it was more of a "for emergencies"/weekend fun car it could understate use as having it available for use but not actually using it (eg bad weather weekends etc) should also result in deduction. Ultimately you'd need to either look for caselaw to find what the courts have accepted or just try to argue it out. 

Only had one experience with the Motor Ombudsman, they ruled in my favour beyond what I was asking for, with only a single pushback on their initial comments so I was happy enough with them. Dont have the multiple engagements, unlike the Financial Ombudsman, to really have a feel for how good they are. Obv they are different being a discretionary ombudsman rather than one created by statute.

Polish72

DullGreyGuy said:

Current price for the car is irrelevant, it's a deduction from what you paid for it for use received. 

The 45p rate feels high to me given when its considered for taxation purposes it also covers the fuel though I know when historically looking at the AA/RAC calculations they almost universally had the 45p as being far too low for what it was supposed to be (bearing in mind I was never looking at cars doing 60+ mpg). I only saw one case so dont know if its the universally used rate or just happened to be it for that one case. 

A price per mile isn't too bad conceptually, arguably if it was more of a "for emergencies"/weekend fun car it could understate use as having it available for use but not actually using it (eg bad weather weekends etc) should also result in deduction. Ultimately you'd need to either look for caselaw to find what the courts have accepted or just try to argue it out. 

Only had one experience with the Motor Ombudsman, they ruled in my favour beyond what I was asking for, with only a single pushback on their initial comments so I was happy enough with them. Dont have the multiple engagements, unlike the Financial Ombudsman, to really have a feel for how good they are. Obv they are different being a discretionary ombudsman rather than one created by statute.

Thanks again. I've looked into other forums regarding similar situations and there is a tendency for traders and dealerships to offer the 45p rate by default as this is quoted by HMRC to reflect usage but also uses tax, insurance and fuel into this figure. Some have resolved their issues having negotiated a better rate, some as low as 5-10p as it's felt that better reflects true usage as the other additions are already paid for.

I think in this instance I will suggest a 5p usage surcharge and take off any mileage associated with driving the car to dealerships or the delivery. That should offset the difference between the purchase price and their adjusted figure for fair use. 

Arunmor

What is your excess mileage rate at the end of your contract?  With luck it will be significantly less.

Mildly_Miffed

Arunmor said:

What is your excess mileage rate at the end of your contract?  With luck it will be significantly less.

Agreed that this is the per-mile to point to.

A deduction for fair use is perfectly legitimate. It's merely the amount you're arguing over.

Bigphil1474

The 45p mile rate that HMRC use goes back to 2011 so well out of date but it is what it is. I used to deal with mileage rates at work, can't remember all the details, but roughly speaking from that 45p per mile, around 11p per mile was fuel costs, then the rest covers depreciation, maintenance, repairs, servicing, tyres, etc. etc. If you've paid for everything yourself, then really they should only be looking at depreciation costs for 'fair use'. As above, if they have set a rate for excess miles, that seems a good starting point, but I wouldn't want to be going above 10p per mile for depreciation of 5,000 miles in 6 months (£500).

Grumpy_chap

The 45 pence per mile rate is excessive as a "cost of benefit received" as this is all inclusive of all costs of running the car - insurance, fuel, maintenance and (of course) depreciation.

If the OP has purchased the car on PCP - they seem to say they have - then the PCP often includes a pence per mile for excess mileage over the agreed term.  That might be a fairer starting point for what the OP should suffer now for the beneficial use to date.

Polish72

Thank you for all your replies.

A few things stand out in this situation. Firstly, the main issue the car is, suffering from existed before I bought the car and reoccured only weeks after having been supposedly fixed under warranty prior to purchase. This, to me, tells me the car was never 'fit for purpose' and so I'd question whether a fair usage charge should be added at all. Secondly, I agree that the 45p per mile rate is disproportionate and an obvious ploy to get as much taken off the refund quote. Lastly, the mileage itself that has been added some of which included the initial delivery and driving to and from the service centres to get this issue rectified.

DullGreyGuy

Yes, use before rejection explicitly applies to vehicles in the CRA for all cases other than your short term right to reject. For non-vehicles it's only after 6 months.