Leases (PCP) mileage limits and their purpose

[rdfcpete]

Just a point of discussion I recently came across via the Mrs' PCP on her previous Megane, mileage limits being something that I guess only ever comes up as a 'query' or issue at end of term.

I've never had a PCP or lease myself, ever, so it was an interesting one for me.

She'd had the Renault for coming up for 3 years and looked at the huge, ever growing market for other lease options. She'd set her heart on an A1 or Polo. Nearest Volkswagen dealer got her in, test drive etc, threw as many comforts her way as they could.

The intriguing bit for me was that the VW salesman stated several times that despite the fact she was way, way over her mileage limit on the Renault contract, that VW would settle the extra mileage fees - bearing in mind the Megane was 8k a year, so 24k across term - she was handing the car over with 52k miles on the clock. Way over, probably over £1200+ in extra mileage fees. The VW salesman assured her she wouldn't need to pay any of it and the contract would be 'settled' by them & that she just had to put down a mandatory deposit (£500 in this case).

This was pretty much the theme from every offer from all manufacturer approved dealers, they were overly enthusiastic to 'clear' & settle the Renault contract to get the business on their car from her. Naturally, perhaps.

This drew the question in my mind, if you're looking at leasing/doing a pcp again on another new car at the end of term (and avoid the balloon payment by giving the current car back), what's the point of the mileage limit given that even if you go for a lower mileage threshold and pay less per month as well as on the overall contract and get a better deal, then exceed the overall contract mileage limit, in reality it seems the over spill fees don't apply or come out of the drivers pocket?

E.G. If you had say a brand new MK7 Golf GTI with the below offers on the table;


• 6000   miles/3 years @ £259 a month
• 14000 miles/3 years @ £349 a month

- and you eventually hand the car in with 60000 miles after 3 years with the intention of getting another brand new car on a pcp/lease (from VW or otherwise), why would you go for the more expensive option when the new lease contract vendor (VW or not) will pick up the slack on the mileage T&Cs? 

Thanks.

[omeydz]

Hmm interesting

[Frodo-anni]

Will the excess mileage charge not end up built into the finance figures for the other car?

[rdfcpete]

Will the excess mileage charge not end up built into the finance figures for the other car?

.... no? Not considering in this instance, she changed contract provider (cross lease company and cross manufacturer, too) and the original lease was 100% settled with around 2 months remaining.

I think the dealers are in general that desperate to get your business that they'll do this in a lot of situations, judging by her experience. Which is what led to me to ask, what purpose does the original mileage limit actually serve if it's paid off by the new lease provider so willingly?

[doylebros]

This is just as you've stated, a proactive move to get what business is out there, cause those storage areas are full and that production line is far too expensive to stop.

Plus, those newly introduced road tax charges on new vehicles hasn't help their trade, and the governments pending ruling on city emission charges on vehicles.

There was a good article in the FT (March 24, 2017 5:56 am by Jonathan Eley
Are the wheels about to fall off car finance?) dig it out worth a read if your interested.

[Nodz]

Another thing I've been reading lately about lease deals is always take lower millage than you actually need. A lot of people do this with car through VWFS because if you phone them with 6 months left on the lease you can negotiate the pence per mile price and they usually half it and it costs less than choosing a higher allowance at the beginning of the lease. Also heard of companies lowering the price if you are under on mileage.

I think mileage means very little and its a way to make money out of people who don't know how to play the game when it comes to lease/pcp

[Deako]

Mileage on PCP is only an issue if you are handing the car back. Part ex or sell and it's not an issue.

PCH mileage limits are different however.

[Mk5 GTian]

Mileage on PCP is only an issue if you are handing the car back. Part ex or sell and it's not an issue.

PCH mileage limits are different however.

I have my R on a PCP and will be buying it at the end of the term by paying the final payment of £11k. Looking at 4 year old mk7 R values and 5-6 year old mk6 R values it will be worth way more than 11k and I won't need to worry about excess mileage. I would lose out big time by handing it back.