VWFS 'end of contract' charges invoice & Voluntary termination

[joka80]

Hello

I have recently voluntary terminated my agreement with VWFS. It had between 5 months left to run on it and so I decided to end. I had paid well over the 50% and after reading lots and lots of threads on Legal Beagles, it has occurred to me that I had nothing else to pay. I also had a letter from VWFS saying that there was £0 shortfall and that there was nothing more to pay.

I shall start the story to the best of my ability here describing all points in order. All this started when the car broke down shortly after having the EA189 engine software update. As a result of this, the vehicle was un-driveable and would not go over 30mph and so was recovered to my local VW garage by the AA and for the next month and a half resided there whilst they waited for 'parts'. Constantly fed up and being messed about when the car was going to ready I decided enough was enough and decided to VT my agreement with only approximately 5 months left to run.

A phone call later I was then told by VW within BCA that one of there agents would contact me to confirm a suitable time and date to do the inspection. Bare in mind, the vehicle at this time was legally roadworthy (MOT, tax, insurance) and was still at the VW dealership being repaired. I advised VW within BCA who called me to arrange a date that the car is at the dealership being repaired on a 'goodwill gesture' due to the software update emissions problem and was unable for this reason for the inspection to take place at my home address on file. They agreed and said that it was completely fine for the inspection to be done anywhere and that in this case they would contact the dealership to confirm this. A phone call later, VW within BCA confirmed everything was fine after speaking with the dealership and that when they had a confirmed date/time (presumably after the car was finished from the workshop) that they would call me to go to the inspection located at the dealer some 8 miles away.

A week and a half or so had passed, I had heard nothing about going to the inspection. No phone call or letter. The fact is that the inspection happened without my presence, the report was compiled without my presence, i signed nothing and the car was collected without my presence. A week or so had passed and then I received another letter from VWFS saying that I owe money for 'end of contract' charges and that this is down to repairs within BVRLA guidelines and mileage charges. The bill received was for £6159.00 for excess mileage charges and so called damage when there was normal wear and tear! I did take photos of the car before leaving to go home on the day the AA dropped the car off.

After receiving there initial letter for mileage and wear and tear charges, I wrote them a letter denying all these charges and that as the inspection report was completed without my knowledge, it's credibility and content enclosed within was denied. Since then I have also looked at my finance agreement and the initial sales vehicle mileage on there is wrong (it says 1000 but the vehicle had 6000 when I purchased in 2013). I was also told by the salesman, of which 4 family members and a third party can verify that 'we put a lower annual mileage so the payments are within budget and don't worry you want pay any excess mileage if you end early'.

I can scan and upload the couple of letters which I have received from VWFS, I greatly require your help in the matter with writing letters to them and to resolve the matter. I would also like to see where I stand.

Any help is kindly appreciated.

Kind regards

[R0b]

Re: VWFS 'end of contract' charges invoice & Voluntary termination

Hello

I'll pick this up tomorrow once I've fully read and digested it

[R0b]

Re: VWFS 'end of contract' charges invoice & Voluntary termination

Morning,

This seems to be the typical stance these days with sales guys, offering lower mileage allowances to bring the monthly instalments in line with your budget and then saying that you can VT without penalty but the lender says otherwise. The FCA are looking into the way dealerships and alike are offering finance to consumers and the potential mis-selling, I would suggest you notify them of the issues and mis-selling that might have occurred. Although they won't take on your complaint individually, they will not doubt want to know of consumers who are experiencing these problems - https://www.fca.org.uk/news/news-sto...-motor-finance

Have VWFS given you a breakdown of the damages they believe is beyond reasonable wear and tear, and more importantly do you agree with them? There are a number of issues you've raised which can be used as a defence point e.g. being told you can be present to inspect but VWFS then carry out the inspection without you. Also the fact that you were told not to worry about the excess mileage and have witnesses who can attest to that would help assist you if the matter was ever taken to court.

Given the amount that VWFS are claiming it is possible that if you continue to defend the matter they might issue a claim against you to try and recover the alleged damages. They are also known to issue a default notice against you and in that case you could counter claim for breach of data protection in that respect (if you wish to).

How long was the finance agreement? It would be helpful if you could upload the full agreement (legible if possible) and the letters you received, with your personal info redacted. I'm aware VWFS may have changed some of the wording of their contract recently so I would like to see an up to date one if possible.

As I say to everyone on here, ultimately it is up to you as to whether you want to pay or not but be aware there is a possibility they will record a default on your account and in which case your only real option to have it removed will be issuing a breach of data protection claim against them, though they might counterclaim for the above amount.

I can assist where possible depending on what route you want to take but only you can make the decision and take the risks.

[joka80]

Re: VWFS 'end of contract' charges invoice & Voluntary termination

I will scan the finance agreement I have and also the letter sent by them shortly...thanks

[joka80]

Re: VWFS 'end of contract' charges invoice & Voluntary termination

Attached is PDF finance agreement...

[joka80]

Re: VWFS 'end of contract' charges invoice & Voluntary termination

Attached is first letter from VWFS...

- - - Updated - - -

Attached is second letter from VWFS...

[joka80]

Re: VWFS 'end of contract' charges invoice & Voluntary termination

Attached is third letter in response to my initial letter to VWFS saying that I denied charges and that I wasn't at the inspection. They say in there letter attached an inspection report which I was sent, this was sent to myself by email after the car was allegedly collected without my knowledge (just FYI)...

- - - Updated - - -

Attached is 4th letter from VWFS...

That's all the attachments for now.

[joka80]

Re: VWFS 'end of contract' charges invoice & Voluntary termination

[MENTION=71570]R0b[/MENTION]

Thanks for willing to help on this. I have uploaded all the attachments and wait for your assistance in drafting a letter to them and advice.

Regards

[R0b]

Re: VWFS 'end of contract' charges invoice & Voluntary termination

So I see from their T&Cs that the relevant clause is 11 which relates to mileage of the vehicle.

Despite the clause probably being valid (to an extent) I am however, still of the view that it is not recoverable.

Lenders are all too keen to rely on section 99(2) that says liability which has accrued before termination is not affected, but section 99 needs to be read in conjunction with section 100 which is titled 'liability of debtor on termination of hire purcahse etc. agreements' - so the title of section 100 says it all.

Granted, the wording of section 100(1) can be complicated to understand by the layperson but it does specifically say that where the agreement is terminated under section 99 the debtor shall be liable for:

(1) one-half of the total price payable; and
(2) any sums due in respect of the total price immediately before termination - 'total price' does not include sums for compensation or damages for breaches of the agreement but it does include sums under the total amount payable i.e. instalment arrears.

So where a hirer validly exercises their right to terminate the agreement under section 99, section 100(1) kicks in and limits the hirer's liability, setting out that maximum amount recoverable under the contract. When you combine sections 99 100(1) and 100(4) you get the effect of the termination statement in your agreement under "TERMINATION: YOUR RIGHTS".

Yes, you can argue section 99(2) allows for the recovery of excess mileage, but it is then carved out by section 100(1) so is no longer recoverable. The only time it would be recoverable is if the lender terminated the agreement themselves for breach of contract.

The intended purpose of section 99(2) was the prevent the hirer from recovering any instalments paid over and above the 50% of the total amount payable when they elected to VT.

Obviously the sum of money VWFS are claiming is not a small amount, and only you can decide whether you want to fight it or not. If you do choose to offer any kind of settlement or repayment then you should write to them on a without prejudice basis and explicitly state that any settlement/repayment is not an admission of liability on your part.

Otherwise if you wish to defend it, then you can either choose to ignore it unless they come after you through court, or write a thorough letter setting out your position on the matter.

[joka80]

Re: VWFS 'end of contract' charges invoice & Voluntary termination

[MENTION=71570]R0b[/MENTION]

Thank you very much for the detailed reply. Are you able to assist me by writing out a letter, so that after I can then enter in my details in the blanks and I can send it off to them please? I would greatly appreciate this on all counts...

[R0b]

Re: VWFS 'end of contract' charges invoice & Voluntary termination

I can write up an example but you would need to fill in any gaps that might be missing from it, probably won't be until later tonight / tomorrow at some point

[joka80]

Re: VWFS 'end of contract' charges invoice & Voluntary termination

[MENTION=71570]R0b[/MENTION]

That's absolutely fine, and thank you very much R0b for your help. I look forward to receiving it.

[R0b]

Re: VWFS 'end of contract' charges invoice & Voluntary termination

I've set out quite a thorough response below as an example to get you going but please note this is an example. You will need to tailor it to suit your needs and there is also some wording in square brackets that you may wish to include or exclude. On the question of vehicle damage the letter is based on the fact that you deny any of the refurbishment charges but you might wish to change that also as you do need to be realistic about the vehicle's condition i.e. the cracked bumper repair may be a concession your willing to make but reject all of the other charges.

I've referred to the BVRLA guidelines but double check that they were used in this case otherwise it will make you look a bit silly. If you received the condition report from BCA or VWFS then that is usually based on the BVRLA guidelines and just check how many SMART / Major repairs are written down on there, and then compare it to the CAP HPI Conditions in the Guidance on VT that I wrote on this forum. That should give you an idea of whether the car is in a reasonable condition or not.

Whether or not you decide to pay is up to you but if your going to defend any court claim, make sure you are all in and not just dipping your toe. Whilst there is good evidence to support the fact that excess mileage cannot be reclaimed contractually there is of course always a risk going to court where you may win or lose and but the decision is really up to you as to whether you decide to take that risk or not.

---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Your Name
Address Line 1
Address Line 2
Address Line 3
Postcode

Volkswagen Financial Services
Address Line 1
Address Line 2
Address Line 3
Postcode

[DATE]

Your Reference: [NUMBER]
Agreement Number: [NUMBER]
Vehicle Registration: [NUMBER]


Dear [NAME / Sir or Madam],

I am writing further to your letter dated 26 July 2017, the contents of which I have noted and my response is set out below.

The excess mileage charges
In your letter you referred to section 99(2) of the Consumer Credit Act 1974 (the “Act”) and also clause 11 of the agreement to support your point that the £5,354.64 worth of excess mileage charges (the “Mileage Charges”) are recoverable. However, I must disagree in that your interpretation of the Act is misguided.
The true purpose of section 99(2) is to prevent the hirer from recuperating any instalments paid over and above one half of the total amount payable when they exercise their right to terminate. Even if this is not the case, both sections 99 and 100 of the Act must be read together, particularly as section 100 is titled “Liability of the hirer upon termination of hire purchase etc. agreement”. For the avoidance of doubt, I have set out below and in full, section 100(1):

Where a regulated hire-purchase or regulated conditional sale agreement is terminated under section 99 the debtor shall be liable, unless the agreement provides for a smaller payment, or does not provide for any payment, to pay to the creditor the amount (if any) by which one-half of the total price exceeds the aggregate of the sums paid and the sums due in respect of the total price immediately before the termination.

As you can see, the provision explicitly states that where the agreement is terminated pursuant to section 99 then the hirer shall be liable for (1) one half of the total price payable under the agreement and (2) any monies which are due in connection with the total price. You may be aware that the Act has defined ‘total price’ under section 189 as meaning:

the total sum payable by the debtor under a hire-purchase agreement or a conditional sale agreement, including any sum payable on the exercise of an option to purchase, but excluding any sum payable as a penalty or as compensation or damages for a breach of the agreement. (emphasis added)

Accordingly, the Mileage Charges fall into the compensation and/or damages category which are specifically excluded for the purposes of calculating the liability under section 100(1). In these circumstances, it is therefore apparent that the sums which may be recovered upon termination of the agreement under section 99 are arrears relating to the monthly instalments.

Furthermore, the provisions of sections 99 and 100 are explicitly set out in the agreement under the heading TERMINATION: YOUR RIGHTS (which I might add is a statutory form of protection in accordance with Regulation [NUMBER] and Schedule 2 of the the Consumer Credit (Agreements) Regulations 2010). This statement clearly spells out that provided I have paid [AMOUNT] plus any overdue instalments and have taken reasonable care of the goods then I will owe nothing further. There is nothing within the statement suggesting that I am liable for excess mileage or any other charges. I have discharged my obligations under these provisions and the conditions imposed by the contract is therefore void under section 173 of the Act as it imposes a greater duty than that imposed by section 100.

Notwithstanding the above, I would also like to add that the at the time of entering into agreement, I specifically explained to the salesperson at the dealership that I required [NUMBER] miles per annum. However, [he/she] explained that I could keep my monthly instalments down and voluntarily terminate the agreement without penalty including any excess mileage. I relied on this statement which was witnessed by four other members of my family and in which case, the statement turned out to be false. In the circumstances, it is my view that the dealership (acting on behalf of Volkswagen) had in fact made a false representation and as such, I hold Volkswagen jointly liable as a result.

Charges for vehicle damage

In respect of the refurbishment charges for damage to the vehicle, they are not accepted. Irrespective of whether the refurbishment charges form part of the terms and conditions, it does not necessarily follow that the charges are automatically recoverable. In this case, any compensation sought by Volkswagen as a result of vehicle damage must be viewed in light of section 100(4) of the Act and not the agreement. This is because (as you may be aware) statute law prevails over common law.

British Car Auctions who carried out the inspection did so in accordance with the British Vehicle Rental and Leasing Association (“BVRLA”) Guidelines. However, you will be aware that the BVRLA guidelines are intended to be used in relation to the leasing of cars and not for hire-purchase agreements. In any event, the standard of care under the Guidelines is much higher whereas the Act only requires me to take reasonable care of the vehicle. More importantly, the guidelines do not take into account the fact that the age of the vehicle when determining whether the damage is reasonable or not i.e. whether the car is 2 years old or 7 years old the allowance for damage remains the same.

Whilst there is no definition of reasonable under the Act, I think a common-sense approach would be most appropriate. That is to say, you would expect a vehicle to be returned in a safe, legal and reliable condition taking into account the vehicle’s age, any fair wear and tear as well as any immediate repairs required in the course of running the car. Having said that, I believe that the condition of the vehicle both internally and externally, was returned to Volkswagen in a reasonable condition [along with a full service history and a valid MOT certificate]. Overall, my duties are therefore extinguished in respect of the vehicle’s condition under section 100(4).

For the reasons I have explained above, I do not feel that Volkswagen is entitled to recover the Mileage Charges nor is there any merit in its claim as regards to the condition of the vehicle. Therefore, I will not be paying such sums. [Please note that this letter sets out my final position on the matter and if you believe that you are entitled to the alleged sums then I would suggest that you issue proceedings (which will be robustly defended).]

Sincerely,

[YOUR NAME]

[joka80]

Re: VWFS 'end of contract' charges invoice & Voluntary termination

[MENTION=71570]R0b[/MENTION]

Thank you very much for the letter template. To answer some of your points in the post with regards to the vehicle condition. I have checked and correlated the BVRLA and compared it to the CAP/HPI chart that you posted on the forum here and my car falls into the following categories

3-4 years: Maximum of 4 areas/panels requiring SMART repairs to any part of the vehicle including alloy wheel/glass.
All ages (interior): No visible damage to interior trim, carpets not stained beyond repair.
All ages (loose items): V5 present, service book fully stamped, no mileage discrepancy, all loose items present including keys
All ages (tyres): Maximum of 1 tyre needs replacing

Essentially the first column of the chart. The car had no interior damage, everything was present including MOT, V5, two sets of keys and service book/owners manual. No tyres needed replacing.

There 'inspection' report is attached. Please let me know what you think of it and so if possible with your help we can further tweak the letter with this new info prior to me adjusting with my info and sending off...thanks again

[R0b]

Re: VWFS 'end of contract' charges invoice & Voluntary termination

Was the car brand new when you took possession of it? I have to admit the bumper and the allegedly broken wing mirror would be a concern in terms of reasonable condition.. they look in pretty bad condition. Was there any reason why you didn't have these repaired?

With exception to the bumper and broken wing mirror the other charges could all be argued as falling within the reaosnable condition standards and requiring SMART repairs. The bumper and wing mirror costs are put down as estimates so they are not guaranteed and therefore open to scrutiny. BCA have suggested the bumper would need replacing which of course is an expensive job. However, you might be able to argue that the crack is small and doesn't warrant a full bumper replacement but rather minor bodywork instead. You could obtain some quotes on whether it would be possible to repair a crack like that without replacing the whole bumper and argue your case that way.

You might want to do the same for the broken wing mirror too.

Of course the final decision is down to you but you should do some due diligence before committing to anything.