PCP – Using The Law To Your Advantage

Hi, Graham Hill here, thank you so much for visiting my blog, I hope you learn a lot and as a result end up driving a great car. In order to do so you can get all the information you need by buying my book, An Insider Guide To Car Finance or use me to finance your next car. Happy driving.
One of the things I’ve never quite understood is the way that so many industries, the motor industry in particular, avoid like the plague the rights of consumers. If the rules are considered to be unfair on the providers then the industry should fight to have them changed.
Take for example personal contract purchases (PCP). Dealers try to con customers into coming out of the agreement early in order to put them into another new car. They will tell the customer that they are simply taking their old car back and allowing them to go again with a brand new car. Nothing wrong with that you might think but they are exercising, on behalf of the customer, what is known as Voluntary Termination (VT), sections 99 & 100 of the Consumer Credit Act.
This allows a customer to simply hand back anything (cars, TV’s, lounge suites, computers etc.) he has on HP or Conditional Sale after 50% of the total cost has been fully paid. Again nothing wrong with that, it’s your legal right. However, few dealers actually explain the process properly and forget to mention that whilst exercising a VT shouldn’t affect your credit score it is noted on your credit file and could affect your ability to obtain finance in the future. Miss-selling? Only time will tell when the claims companies move into the PCP arena.
Now that process exercised by car dealers, as it seems to have a somewhat minor affect on the leasing companies that provide PCP, has become an acceptable practice as it would seem very few people exercise the VT right in order to obtain a car a little early anyway. However, when I suggest that people who are locked into a PCP, should use VT to terminate their agreement early in order to avoid a service and MOT that is usually due just as the car is due for return at the end of a 3 year agreement, you’d think I’d turned into Satan himself! Even worse when I go on to use VT to avoid excess mileage charges.
Let’s say you have been conned by a salesman to take out an agreement based on 5,000 miles per annum, without him asking what your actual mileage is likely to be, and find that you have actually overshot the mileage allowance by 20,000 miles. It is common to find that you will be facing an end of agreement excess mileage cost of £2,000. So I suggest that the driver VT the car to avoid the excess mileage charge because if you return the car under the VT rules there is no reference to mileage so in theory you could be 100,000 miles over the mileage allowance but as there is no mileage restriction on the VT of a PCP, as long as the car is in reasonable condition you can VT the car.
Finance companies will try to charge the excess mileage on a pro-rata basis but here’s the thing, they are abusing the law. They know that they can’t charge the excess mileage but they do it in order to frighten the driver with a court case. And that shouldn’t be allowed to happen. The lender knows the rules perfectly well but they are allowed to frighten customers into parting with cash – it’s not right! By Graham Hill


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