VW contract hire problem - Early termination

[spsdjone]

Hello
I took out a 2 year contract hire agreement on a skoda octavia.
agreed mileage of 16k (8kpa)
Dealer offer was £2k up front, with 24 rentals of £180
I decided to add another £2k up front and this dropped rentals to £100
Looking to return the car after 13 months as i dont need 2 cars and have received a settlement figure of 55% for the remaining payments, which I understand is the VW standard for vehicles in the last 12 months.
I am also up to 11.5k miles and they want to charge me a pro rata excess mileage charge over the first year figure of 8k.

My issue here is twofold:
- Ive argued that my overall contract was for 16k miles and when you add up the settlement and excess mileage charges, this comes to just £80 short of the full 2 year lease charge, but they are getting a vehicle back with 4.5k under the agreed miles and nearly 12 months of extra residual value

- Additionally, the dealer offer of £2k up front has disadvantaged me in that the "discount" of 45% that they are calculating is based on the monthly payment amount and not on the total amount paid to date, which means that if I had paid £2k up front instead of the £4k, i would be paying them £560 LESS at month 13. Ive argued that this was never explained when i gave them the extra money and although the idiot on the phone tried to explain this as me getting the "benefit" of the reduced monthly charges, I dont feel this is at all TCF.

Any advice here is gratefully received

thank you

[R0b]

Re: VW contract hire problem - Early termination

Possibly not something you want to hear but I don't think you have much of a leg to stand on, you either pay the early settlement fee or see the contract through to the end.

I am also up to 11.5k miles and they want to charge me a pro rata excess mileage charge over the first year figure of 8k.

Assuming they have a clause in the contract which allows for this, then I'm afraid you will have to pay up.

Ive argued that my overall contract was for 16k miles and when you add up the settlement and excess mileage charges, this comes to just £80 short of the full 2 year lease charge, but they are getting a vehicle back with 4.5k under the agreed miles and nearly 12 months of extra residual value

The vehicle's value is irrelevant, you've entered into a fixed term hire agreement on an agreed fixed monthly instalment. You agreed to the terms when you took the car and because you find out that the agreement was a bit of a bad deal, doesn't excuse you from complying with the terms. Hire agreements don't afford you the benefit of voluntary termination unlike conditional sale or hire purchase agreements, so the early settlement / termination fees are much higher and VW are entitled to the sums owed.

Additionally, the dealer offer of £2k up front has disadvantaged me in that the "discount" of 45% that they are calculating is based on the monthly payment amount and not on the total amount paid to date, which means that if I had paid £2k up front instead of the £4k, i would be paying them £560 LESS at month 13

The benefit that your getting is the reduced monthly payments, at £100 and that is fair. The whole purpose of paying a deposit upfront is to reduce the monthly instalments but nothing more. If the matter went to court I don't think a judge would expect VW to go through the financials with you to determine what your best deal. It would be sufficient for them to explain that a deposit of £4k would reduce your monthly instalments from £180 to £100 and the onus is on you to make your own decision and calculations.

Again, not the answer you want to hear but hire agreements are only useful if you are going to keep within the terms of the agreement, and plenty of people get stung by the terms especially the excess mileage or the termination fees.

The only thing I can suggest is that if you pay the early settlement you ought to be entitled to a rebate of future interest and charges that you would have otherwise paid, so be sure that they have deducted the correct amount.