Voluntary Termination of a PCP car deal - any experiences?

[happyhacker]

I’m about to start proceedings. Car in for minor chip and dent removal today and wheel refurb in two weeks by then I’ll be sending the letter.
It’s my understanding that mileage should not be an issue. They cannot charge for extra mileage but they do try it on and obviously people pay.

Mileage is 100% an issue when you hand a PCP car back (either via VT or end of term).

You signed up for X amount of miles per annum (which is the factored into the finance company setting a residual value for your car). If you are over the mileage you will be liable for the excess mileage cost (as the extra mileage will have reduced the value of the car).

If this is only a couple of hundred quid they might not chase you. If you are massively over your mileage you better believe they will follow up on it and non payment will wreck your credit rating (it will be registered as a default).

 

[Bunkermagnet]

Mileage is 100% an issue when you hand a PCP car back (either via VT or end of term).

You signed up for X amount of miles per annum (which is the factored into the finance company setting a residual value for your car). If you are over the mileage you will be liable for the excess mileage cost (as the extra mileage will have reduced the value of the car).

If this is only a couple of hundred quid they might not chase you. If you are massively over your mileage you better believe they will follow up on it and non payment will wreck your credit rating (it will be registered as a default).

Exactly what my daughter had, having foolishly signed up for the cheaper lower mileage option. She managed to do a deal on a smaller lower cost to her(and more sustainable) option with BMW, got rid of her top end X3 and managed to avoid the £9k penalty fee in the process.

 

[Bunkermagnet]

I've never done a PCP and now at my time in life never will but I was told that PCP's will become one of the next "selling scandals" sometime soon, similar to mortgage misselling, bank charges etc

I remember reading an article not too long ago saying exactly this. It’s even more obvious when you realise that apparently 90% of all new Mercs sold are PCP.

 

[GreiginFife]

Exactly what my daughter had, having foolishly signed up for the cheaper lower mileage option. She managed to do a deal on a smaller lower cost to her(and more sustainable) option with BMW, got rid of her top end X3 and managed to avoid the £9k penalty fee in the process.

9 grand? In excess mileage fees?

 

[Bunkermagnet]

9 grand? In excess mileage fees?

Yes. Stupid I know, and I couldn’t believe how stupid she was. She was something like 20k miles over the allowance.
But then she was using for work, with lots of miles, and had taken out a contract with something like a 6k a year mileage. They figured that paying the lowest option and Then penalty charge would work out cheaper overall than paying the for a correct mileage allowance contract over the term. They hadn’t planned on getting rid of it mid term due to its running costs.

 

[GreiginFife]

Yes. Stupid I know, and I couldn’t believe how stupid she was. She was something like 20k miles over the allowance.
But then she was using for work, with lots of miles, and had taken out a contract with something like a 6k a year mileage. They figured that paying the lowest option and Then penalty charge would work out cheaper overall than paying the for a correct mileage allowance contract over the term. They hadn’t planned on getting rid of it mid term due to its running costs.

Something not right there. Even the X3M Comp is usually around 23-25p per mile excess. That would be 36-39k miles over. And that, I'm afraid, is not the fault of the dealer or the PCP.

On the next "top" model (the X3 M40i, (previously the X3 35d) excess is usually around 15p per mile. so that would be somewhere around 60k over.

 

[Piece]

I remember reading an article not too long ago saying exactly this. It’s even more obvious when you realise that apparently 90% of all new Mercs sold are PCP.

It's about getting the right PCP from the onset and knowing what you are getting yourself into, realistic commitment, etc.

My wife is about to finish her PCP and the GFV/Balloon is around £3k under the current second hand market value. No brainer to buy the car. And well under mileage too as the annual contract was a realistic one.

 

[Bunkermagnet]

Something not right there. Even the X3M Comp is usually around 23-25p per mile excess. That would be 36-39k miles over. And that, I'm afraid, is not the fault of the dealer or the PCP.

On the next "top" model (the X3 M40i, (previously the X3 35d) excess is usually around 15p per mile. so that would be somewhere around 60k over.

All I know is that it was a 2ltr diesel, fully loaded showroom model with a list of £50k, and the PCP was through BMW.Its gone now, and she’s got over it and learnt the error of her ways. All that matters is she won’t do it again.

 

[Bunkermagnet]

It's about getting the right PCP from the onset and knowing what you are getting yourself into, realistic commitment, etc.

My wife is about to finish her PCP and the GFV/Balloon is around £3k under the current second hand market value. No brainer to buy the car. And well under mileage too as the annual contract was a realistic one.

I agree I had one on my Mazda, not because I didn’t have the money to buy it outright from the start, I did, but there was no financial penalty on my money or pocket by taking out the PCP. The balloon I put into a bond which earnt me a decent return (compared to everything else right now) so it even reduces what I’ve paid for the car.

 

[GreiginFife]

All I know is that it was a 2ltr diesel, fully loaded showroom model with a list of £50k, and the PCP was through BMW.Its gone now, and she’s got over it and learnt the error of her ways. All that matters is she won’t do it again.

My point was though, your original post on the subject castigates BMW for somehow setting the rate low to make the car affordable when that's not what happened.

90% of the dealers set advertised "from" prices based on 8000 miles PA and show this in the pricing structure, if the customer choses another limit then the cost will go up or down at their request.

£9000 excess mileage charges on a 2.0 Diesel (max 15p per mile) could only be down to the driver recklessly ignoring the limit that they agreed to (to the tune of some 60000 additional miles).

PCP rate is also based on/affected by the deposit paid and the monthly payment agreed.

 

[Bunkermagnet]

My point was though, your original post on the subject castigates BMW for somehow setting the rate low to make the car affordable when that's not what happened.

90% of the dealers set advertised "from" prices based on 8000 miles PA and show this in the pricing structure, if the customer choses another limit then the cost will go up or dowun at their request.

£9000 excess mileage charges on a 2.0 Diesel (max 15p per mile) could only be down to the driver recklessly ignoring the limit that they agreed to (to the tune of some 60000 additional miles).

PCP rate is also based on/affected by the deposit paid and the monthly payment agreed.

I agree with the main baisis of your comments, however I had a few garages (non German ) tell me when I was looking round for my current car that BMW and VW deliberately priced their PCP's on the low side to try and keep those car owners buying again because the value of their car was less than another marque's dealer would give them if you can understand what I'm saying.
I don't doubt my daughter was an idiot for taking it on, however when trying to get out of it they did everything they could to keep her either in that car, or at least in another BMW which ultimately she had to because of the financial hole she had got herself in with it.

 

[Jamesbrown]

Mileage is 100% an issue when you hand a PCP car back (either via VT or end of term).

You signed up for X amount of miles per annum (which is the factored into the finance company setting a residual value for your car). If you are over the mileage you will be liable for the excess mileage cost (as the extra mileage will have reduced the value of the car).

If this is only a couple of hundred quid they might not chase you. If you are massively over your mileage you better believe they will follow up on it and non payment will wreck your credit rating (it will be registered as a default).

VTing a car does not warrant paying excess mileage. Voluntary termination is your legal right to end early providing you’ve paid the 50% of total owing and the car is not beyond normal wear and tear. That’s the law.
There is no provision in the law for excess mileage. Lenders will chase you for it, they will insist you have to pay it, you will get bullying letters and it will drag on and you’ll have to fight it. Granted if it’s a few hundred pounds, might as well pay it. But if your exploiting purposely the VT rule and racking thousands more miles than your allowed intentionally then you ignore the letters and fight.

VT cannot affect your credit rating as your exercising a legal right.

 

[GreiginFife]

I agree with the main baisis of your comments, however I had a few garages (non German ) tell me when I was looking round for my current car that BMW and VW deliberately priced their PCP's on the low side to try and keep those car owners buying again because the value of their car was less than another marque's dealer would give them if you can understand what I'm saying.
I don't doubt my daughter was an idiot for taking it on, however when trying to get out of it they did everything they could to keep her either in that car, or at least in another BMW which ultimately she had to because of the financial hole she had got herself in with it.

Every dealer will try to give you a lower trade in. It's not in their interest to do otherwise whether they be German or not.

As Piece pointed out, it's about reading the agreements, assessing the numbers and choosing a level that is right for you. All of the values are made available before you sign any paperwork.

I am on my second BMW PCP and 4th in all since 2014 (the other two being Mercedes) and never had a problem once with values being other than I anticipated.

I don't think it's rocket science that if you take a high value car at a low monthly payment that there will be a deficit in value at the close.

 

[happyhacker]

VTing a car does not warrant paying excess mileage. Voluntary termination is your legal right to end early providing you’ve paid the 50% of total owing and the car is not beyond normal wear and tear. That’s the law.
There is no provision in the law for excess mileage. Lenders will chase you for it, they will insist you have to pay it, you will get bullying letters and it will drag on and you’ll have to fight it. Granted if it’s a few hundred pounds, might as well pay it. But if your exploiting purposely the VT rule and racking thousands more miles than your allowed intentionally then you ignore the letters and fight.

VT cannot affect your credit rating as your exercising a legal right.

You are not wrong about the excess mileage charge but it's a bit glib to say it won't apply. The issue with the VT and excess mileage is under the fair wear and tear. That is based on an agreed mileage which if heavily exceeded would therefore have excessive wear and tear.

The VT won't affect your credit rating, the outstanding bill the finance company chase you for could. You can be assured if the mileage is heavily over agreed limits the finance company will pursue a case over charges. You can fight it of course, but I believe there have been some recent cases taken to court and found in favour of the finance companies (money saving expert forums had it if I recall).

Anyways, as always - take professional legal advice rather than the ramblings on a golf forum from people who are bored with lockdowns. ?

 

[KenL]

My A3, handed back at the end, was slightly over on mileage.

I was happy to pay as this was part of my agreement. About a month after I handed the car back, I got an invoice for just over £200.

It was only about 6p per mile.

 

[Karl102]

Sorry, what does VT mean?

 

[MikeH]

Sorry, what does VT mean?

VT = Voluntary Termination

 

[Karl102]

VT = Voluntary Termination

Cheers Mike!
As per the title of the post..... ! Sorry - been a long day....!

 

[PJ87]

My A3, handed back at the end, was slightly over on mileage.

I was happy to pay as this was part of my agreement. About a month after I handed the car back, I got an invoice for just over £200.

It was only about 6p per mile.

Sometimes you have to judge if it's worth paying for the extra milage on the monthly

If their are brilliant deals on say 8000 miles a year and you do 10000 miles but the payment per mile works out less than paying for the 10,000 a year might aswell risk it

 

[Jamesbrown]

I’ve just started the ball rolling with VFS.

Letter sent, phone call received confirming that is what I would like to do.

Providing no hoops to go through the next step should be arranging pick up hopefully.

Over 50% total payed, car under mileage.