Santander Excess Mileage Charge For VT

[OrangeDuck]

So I'm considering doing a voluntary termination (VT) on my Santander PCP agreement, but I've gone considerably over the mileage allowance and I'm trying to figure out if I'm liable for the excess mileage charge if I VT. It's a Conditional Sale Agreement with a Sales Agency Agreement.

There is no mention whatsoever of mileage in the Conditional Sale Agreement, so that alone makes me think I'm not liable for an excess mileage charge if I VT it.

The Sales Agency Agreement does mention the mileage, but the excess mileage charge seems to apply solely at the end of the agreement if I ask them to act as my 'Agent' to sell the car, which I won't be doing with a VT.

I can't upload a screenshot of it, but the key wording for me is under 8(f) and states that the excess mileage charge will only reduce the Guaranteed Price. But it I VT it early, that guaranteed price is irrelevant. There is no mention anywhere about being able to charge me for mileage separately. The wording is below:

8(f) If at the date of return of the Goods to us the aggregate Total Mileage exceeds the aggregate Basic Mileage the amount by which the Guaranteed Price will be reduced pursuant to clause 6 (c) above will be calculated by multiplying the excess of the aggregate Total Mileage calculated on the date of return of the Goods to us over the aggregate Basic Mileage

So I believe they can only charge me for not taking 'reasonable care' of the car, which I know is a hotly debated clause. But I feel like I must be missing something - have Santander really left this quite big loophole in their contracts?

I need to be quite sure before I consider VT because the excess mileage charge I apparently owe is over £10,000 and in addition Santander have massively overestimated the final value. So it basically means that the car is actually worth £10k less than the final value and the mileage charges are even more than this, so I'm screwed either way if I let the agreement end.

Santander will be keen to minimise their losses on this one, so I'm even keener to make sure I know what I'm getting into. Is it feasible that any 'reasonable care' charge for mileage would be less than the incredibly high excess mileage charge? I've looked up car values and the excess mileage actually takes about £3k off the value, far below the £10k+ they're trying to charge me.

What is the likely outcome here? What would you advise my next steps be? I can't afford to be chucking £10k+ about so I'm quite worried about it all - I never want to be in negative equity again!

[atticus]

Are you asking members of this forum whether there is a loophole in terms and conditions that you are not providing for review?

[echat11]

Here's an excellent guide - https://legalbeagles.info/forums/for...on-your-rights

[OrangeDuck]

Having done a couple more hours of research after my post last night, I'm now 100% convinced that the Sales Agency Agreement is irrelevant. The entire agreement only exists as a way for me to sell the car at the end of the term through Santander. If I VT before the end of the agreement, it'll never come into action, especially as I don't currently own the car so there's nothing for them to sell on my behalf.

There was a very similar case that went to the Ombudsman and they basically declared the Sales Agency Agreement irrelevant:

The sales agency agreement is an entirely separate contract to the conditional sale agreement. And the terms of the sales agency agreement set out that the mileage restriction would be imposed if Mrs W were to agree for Santander to sell the car. But, as I said in my provisional decision, there was no need for her to instruct Santander to do this; Santander owns the car, and I can’t see how the sales agency agreement was of any benefit to her and why it would have a mileage restriction included within it.

So that leaves the Conditional Sale Agreement, which makes no mention at any point in the entire contract to mileage. So Santander will have two possibilities to levy a charge, according to the VT Guide on this forum:

1. They could argue that I haven't taken "reasonable care" of the car by doing lots of miles, so they need to charge me. But even with this, I don't think they would have ground to charge me any more than the £3k in value that the car has actually lost because of the mileage. Their only stated mileage costs are in a separate contract which doesn't apply in this case. And even then, it sounds like I could argue the point that mileage alone doesn't constitute a lack of "reasonable care", although I know they will fight very hard on this and I know there's a number of cases that have gone either way.
2. They could also argue that I have "misrepresented my intended use" by doing more miles. But in the guide it sounds like this one is much easier to argue, not least because there is no way to increase the mileage with Santander and realistically people's lives change over multiple years. I've moved house more than once in this period alone.

Does that all make sense and sound like a logical / reasonable argument?

As you say it's wise to get some legal advice here, but I'm wary that it will just be an opinion on my situation and wouldn't reduce my liability in reality, only give me more confidence.

But where I'm at right now, it seems a no brainer to VT. Worst case scenario from what I can see, they charge me a few thousand for excess mileage, regardless of which route they take. I can't see grounds for them to charge more than the value the car has actually lost due to my excess mileage as there is no mention in my contract of what they could charge for excess miles. So that's £3k vs £10k+. Unless I'm missing something?

At the end of the day they currently own the car, so the fact that it's now worth much less than they expected when they agreed it is entirely on them. When I first started looking into this I felt like I was wriggling out of my agreement, but the more I understand it the more I realise it's not a loophole or a technicality - it's just the reality of the situation that they find themselves in. I'm just exercising my legal right to VT from a situation which is clearly not financially sensible for me.

[Frank1]

Does the PCP agreement contain any clauses relating to payment of excess charges before the agreement is terminated?
If there are and you refuse to pay the excess mileage charge that they are likely to claim, they will will not consider the agreement terminated and expect you to carry on making monthly payments.
When you stop making payments Santander will almost certainly start the legal process and by the sound of how much their claim could be, the court allocating the claim to the fast track.

[OrangeDuck]

Does the PCP agreement contain any clauses relating to payment of excess charges before the agreement is terminated?
If there are and you refuse to pay the excess mileage charge that they are likely to claim, they will will not consider the agreement terminated and expect you to carry on making monthly payments.
When you stop making payments Santander will almost certainly start the legal process and by the sound of how much their claim could be, the court allocating the claim to the fast track.

Defaulting is an interesting one and it does mention "failure to take reasonable care of the goods":

Any one or more of the following default charges may also be payable; failure to take reasonable care of the goods, failure to supply the V5 form if the goods are returned to us, failure to notify us of your change of address in clause 11.6, total loss of goods payment described in clause 6 and the termination sums described in clauses 7.2 or 7.3 whichever is applicable

In addition, the mileage fees are mentioned in the "Explanation Document", would this be legally binding? It says that I received a verbal explanation and that a copy was "given to me" and I signed to confirm that.

If you decide you wish to purchase the vehicle at the end of the agreement, you will have to pay the Final Repayment (including the Completion Fee). This payment is larger than your regular monthly repayments, so you should ensure you have sufficient funds available on the due date. If you decide to return the vehicle, provided you have met the terms of the agreement you will not have to pay the final repayment, but you may need to pay extra charges if you have failed to keep the vehicle in a good state of repair and/or have gone over the agreed mileage limit.

Your selected Annual mileage is 6000 miles. The rate for each excess mile is 14.90p (excluding VAT) giving a maximum mileage allowance of 24000 miles for this 48 month agreement

Example of how much you may have to pay if you exceed the mileage allowance and wish to return the vehicle.

14.90p x 5000 miles = £745.00(+VAT)
14.90p x 1000 miles = £149.00(+VAT)
14.90p x 500 miles = £74.50(+VAT)

Should the excess mileage exceed 5000 miles over the agreed mileage allowance, the rate per mile may increase. Please see your sales agency agreement terms and conditions for further information.

Again though, it mentions the Sales Agency Agreement, which is the only place that excess mileage is properly defined and I believe doesn't apply in the case of a VT.

I guess the key point here, outside of grey areas that they will always try and take advantage of (like reasonable care), is if the excess mileage charges are applied before I VT it or not. My understanding is if they are applied beforehand, I have to pay it as part of the VT process in order to ensure my account is not in arrears. But it doesn't mention anywhere about 'before termination' or anything like that, so any excess mile charges would be levied after I VT, meaning I'm not liable since I am only liable for any arrears and reasonable care costs after I've VT'd

Is that right? The more I look into it the more confident I am that they can't charge me for mileage in the case of a VT, but I also feel like I must be missing something. Either way though Santander have definitely dropped the ball a bit by not making all of this crystal clear in the event of a VT. They seem to have only planned for the agreement to end naturally.

[OrangeDuck]

I have also looked at a previous PCP agreement I had for a different car with VWFS. In that agreement, it's absolutely clear that none of this is possible by stating a clear limit in the Hire Purchase Agreement itself and also by stating "That liability will accrue with each mile covered by the Vehicle in excess of those Mileages". That agreement is clear as day that even in the case of a VT, I would have to pay the mileage charges. Santander not so.