Voluntary Termination - Excess Mileage

tank0106

I have a VWFS PCP agreement which i’m looking to either pay negative equity of £2.8k to get out of or VT. I can VT for £1.3k now but I have gone over mileage, not sure on cost per mileage yet but if it’s say 9p i’ll probably have to £1.3k in mileage fees. I’m reading conflicting things on whether they can charge you the excess mileage or not when you voluntary terminate, can anyone shed any light on whether they can or not? Also does VT affect further credit applications?

Woodstok2000

https://forums.moneysavingexpert.com/discussion/6661221/voluntary-termination-excess-mileage

Thats a lot of extra miles! I think the extra mileage will hinge on the wording in your contract - take a look here: https://legalbeagles.info/forums/forum/legal-forums/motoring-parking/vehicle-finance-and-issues/1466886-excess-mileage-charges-following-voluntary-termination-of-pcp-response-to-claim

Regardless, if you decide not to pay it, expect a long fight.

matt_drummer

One thing to be aware of.

Excess mileage is calculated on a pro rata basis.

If you agreed to say 10,000 miles per year over 3 years (30,000 miles in total) and vt at the end of year 2 with 40,000 miles covered your excess mileage is 20,000 miles, not 10,000 miles.

sheenas

I recently sold my car that was on PCP, via Carwow for 4K over the guaranteed minimum value. This might be an option for you to avoid some or all of the £2.8k negative equity.

Goudy

I had this explained to me recently by someone rather savvy with finance agreements, particularly car finance.

"Pro Rata" is the term that you will likely find in the contract relating to termination mileage.

Voluntary termination is a statutory right rather than a contract point or an obligation of the contract and as such you have the legal right to terminate after 50% has been repaid and pay no more repayments on the loan.

But you may find you made an obligation to pay excess mileage on a pro rata basis when you signed the contract. These excess mileage charges are not part of the loan repayments, so aren't included in the normal repayments.

So it stops people signing up on a three year contract at 4,000 per a year and handing it back after one year with 12,000 miles without paying for those 8,000 miles.

Now if you signed up for 10,000 a year and want to hand the car back after 18 months, they are able to charge you the set mileage rate for anything over that pro rata figure (15,000 miles in this example).

Legally you have the right to hand it back after 50% and make no more repayments of the loan, but the contract you signed will likely say if you do, then you pay for any excess mileage on a pro rata basis.

Mildly_Miffed

£1,300 at 9p/mile would be nearly 15k miles over the amount you told the financier you'd be covering in their car.

Why do you think it unreasonable to pay that?

Arunmor

Just keep the car to end of contract pay the lump and then either keep or sell the car. The excess mileage is then not an issue. Are you just looking for a shiny new one?

tank0106

https://forums.moneysavingexpert.com/discussion/comment/81937132#Comment_81937132

Yeah I just want it gone to be honest. It’s been a pain, and i’m paying a lot per month for something that’s not great and don’t want to deal with it for another year!

tank0106

Not unreasonable if I have to pay it I have to pay it. But if you can avoid it, who wouldn’t try to avoid it?

tank0106

Thank you, i’m looking into this also! Good to know you had a good experience with carwow! Was it 4k over the reserve?

facade

When you say negative equity of £2.8K is that the settlement figure? (I doubt it tbh)

Or do you mean the remaining monthly payments on the PCP come to £2.8K and then you hand the car back rather than pay the balloon? You'd still be on the hook for the over mileage. (£1.3K, so it will cost you £4.1K)

Negative equity (the car worth less than the balloon/GFV) doesn't matter if you hand it back

VTing will cost you £2.6K

Do check your contract, but as said lenders are wise to people trying to shirk excess mileage payments so it would be very unusual to not have a clause to make you pay.

The only way to save the mileage payment is to buy the car outright, either settle the finance (you can sell to WBAC etc. and pay the financier any shortfall or pay it all yourself and save a few pounds interest) or run the PCP to the end and pay the balloon.

If the offer/potential selling price is less than the balloon it likely would be cheaper to VT and pay the mileage.