VT PCP Mercedes excess mileage charges

[cjm128]

Hi All,

I've VT'd my Mercedes with Mercedes Finance for my PCP agreement, and have been sent a bill for excess mileage (a fairly substantial sum). I sent a letter to dispute this based on information in this forum to deny the charges and highlight it is unlawful to charge me for them. I expected them to argue the point about reasonable condition however the response was slightly different.

"The opportunity to terminate your agreement and not be liable for ant further payment is subject to the vehicle coming back to us in a reasonable condition. The provisions of the consumer credit act that cover a customers right to Voluntary Terminate their agreement do permit us to include any over mileage when determining what is 'not reasonable' and we can charge for any mileage over the contracted mileage adjusted for the time you had use of the vehicle.

I would refer you to section 99(2) of the Consumer Credit Act which confirms you are liable for any charges accrued prior to the termination of the agreement"

So they are insistent that the charges remain due. It seems like a mixed argument between section 99(2) of the CCA and an argument about reasonable condition which is a little different to other arguments I've read on the forum.

Could anyone offer any experience or advise on this, in particular next steps please?

Many thanks.

[R0b]

Re: VT PCP Mercedes excess mileage charges

Hello,

The argument about accrual doesn't apply as it only accrued after the vehicle was handed back and they checked the mileage then decided to charge you for it. S.99 refers to charges carried prior to termination and this would be any missed monthly payments at the time of you VTig the agreement. This is because if you missed a payment and were served with a default notice, you could still effectively VT but would owe the outstanding amount which has accrued before termination.

For their argument to app, they would have needed to check the mileage and then invoice you for any amounts but the only way this could apply is if you saw the agreement through to the end and they then billed you for it.

[cjm128]

Re: VT PCP Mercedes excess mileage charges

Hello,

The argument about accrual doesn't apply as it only accrued after the vehicle was handed back and they checked the mileage then decided to charge you for it. S.99 refers to charges carried prior to termination and this would be any missed monthly payments at the time of you VTig the agreement. This is because if you missed a payment and were served with a default notice, you could still effectively VT but would owe the outstanding amount which has accrued before termination.

For their argument to app, they would have needed to check the mileage and then invoice you for any amounts but the only way this could apply is if you saw the agreement through to the end and they then billed you for it.

Thanks R0b, appreciate the reply. That's what I had thought. I think I'll respond with a letter from a solicitor to add more weight to my point!

[pieterhartzer]

Re: VT PCP Mercedes excess mileage charges

Hi R0b,

Thanks a million! I don't know how I did not find that during my search.

[pieterhartzer]

Re: VT PCP Mercedes excess mileage charges

I just received a letter similar to cjm128.

Merc claims that the mileage is part of my contract for VTing, and I checked, it is in my contract with regards to early termination. The mileage was noted when they collected the vehicle. The VT acceptance letter from Merc stated that the vehicle must no longer be used. The only argument that I can think of is the mileage was accrued between the VT and the date I received their letter. Is this correct?

They also stated "Should you be at all unhappy with our handling of your complaint you have the right to refer your complaint to the Financial Ombudsman Service". Does this mean I have to complain to the ombudsman now, or respond back to Merc?

The letter is pasted below for information.

Thanks,
Pieter

Whether you are returning your car at the end of your agreement or upon use of the Voluntary Termination (VT) clause, as you have not exercised your right to purchase the car, an excess mileage charge will be raised should your return mileage exceed your total mileage allowance. This obligation is set out within the first page of your agreement, under key information. The provisions of the Consumer Credit Act that cover a customer’s right to VT their agreement do permit us to include any over mileage when determining what is 'not reasonable' upon the cars return. It is stated in your agreement under ‘Excess Distance’; ‘If the vehicle is returned to us (whether at the end of the period hire or an earlier termination), we will calculate the total distance travelled by the vehicle whilst in your possession (the “Total Distance”)’.

Your mileage allowance has therefore been re-calculated on a pro-rata basis in line with the length of time you have had the vehicle in your possession. Please find below a breakdown of your excess mileage calculation for your reference:

Original Allowance: 40,000 (833 per month)
Term of agreement: 48
Terminated early by: 10 months
Revised allowance: 29,167 (833 x 38)
Collection miles: 31,654
Exceeded by: 2,232
Pence per mile: 9 pence plus VAT
Total: £138.89

I would also like to kindly refer you to S99 (2) Consumer Credit Act 1974 where it states:

‘Termination of an agreement under S (1) does not affect any liability under the agreement which has accrued before the termination.’

As your agreement was subject to a mileage allowance prior to termination and you have exceeded the allowance of 29,167 miles, the charge has been raised correctly and remains payable.

[R0b]

Re: VT PCP Mercedes excess mileage charges

Well they are wrong, you can go to the ombudsman and you will need to file a complaint with them and see where it goes from there. If the Ombudsman does not uphold your complaint then you can still reject their decision and Mercedes will need to take you to court. For such a small sum its not even worth the hassle to them.

Alternatively you could ignore them and see what happens

[pieterhartzer]

Re: VT PCP Mercedes excess mileage charges

Hi R0b,

Thanks for the reply. I ignored a demand for money, where I believed that I was right and it ended in huge thing with bailiffs and lots of other fees. I will complain to the ombudsman and then see where that goes.

Thanks,
Pieter

[R0b]

Re: VT PCP Mercedes excess mileage charges

If ou would like some help with your complaint to the Ombudsman let me know, it might be better to start your own thread on this as it is easier to track. I am surprised they have instructed bailiffs as they have no right to do so. It would be interesting to see any correspondence on the bailiffs side of things. It is not a debt that is recognizable, it only becomes recognizable where the court has made a judgment in their favour.

[pieterhartzer]

Re: VT PCP Mercedes excess mileage charges

R0b,

Thanks, I will start my own thread once I get all my paperwork and dates together. And apologies, I just noticed that I did not mention the previous post that the bailiffs were from a fine from the council, not the Merc. I will link my post here. I really appreciate the help.