Covid and leasing

[Ijwrighty]

Hi,

I currently have a PCP which, before covid, I was using on a regular basis. Now, the government have put us in various lockdowns and the message has always been stay home if you can etc. Now I have worked from home since March and can’t see this changing for foreseeable. I see this as my circumstances have change but outside of my control.

I’ve agreed a 4 year term at 10k per year costing £615 a month. I’m currently about 50% of the way through with 20k on the clock. I’ve only done 750 miles since March 2020. I’m lucky that my personal circumstances haven’t changed and I’m still full time employed so can still afford the repayments. I’m not in a position to VT.

my issue is, it feels like finance companies are going to be making a killing out of this situation. For example, I agreed 40k miles over 4 years which came up with the 615 figure so the finance company would be safe in the knowledge they can sell that car on for the estimated depreciation value. No problems with this. Eg if my circumstances changed, new job etc, and I handed it back 20k under the agreed mileage that’s my problem because it’s a choice I made. In the current climate, it’s not my choice that I’m not using the vehicle, it’s the rules set in place by the government. I guess my point is, why should these finance companies receive cars back way under mileage due to circumstance out of our control?

I would be happy with a reduction in payments but apparently you can’t reduce the mileage on a pcp? I don’t need a payment break as I can afford it. The other thing I’m looking into is maybe transferring the pcp to a new car (lower spec) over another 4 year period to get the monthly payments down.

any thoughts on this at all?

[Ijwrighty]

R0b I hope you don’t mind the direct tag but do you have any thoughts at all on the above?

[R0b]

Not sure I can add anything to be honest and I don't really see what the issue is. You ask why lenders should receive under mileage cars but that's just the way it is, and in most occasions they will receive cars back that have done tens of thousands of miles over and above the contractually agreed amount (sometimes by those who abuse their position) but there is not much they can do about it. The VT 50% amount is a balance between goods that depreciate drastically and those that don't.

You can ask the lender to reduce the mileage but I doubt they will do that, it's a variation and will be at their discretion. The CCA does cater for situations like this if you carry out a VT. Section 100(3) of the CCA says that if a court is satisfied that the 50% amount is more than the loss sustained by the lender then the court can award that. You would need to take it to court for that to be determined.

Whether you can transfer to another car you would need to speak to the relevant dealership to see if this can be done.