28 November 2016 at 2:11 pm #101136
Hi Stuart, i wonder if you can help? I was in a Mercedes-Benz dealership at the weekend looking to finance a new car over 3 years on a PCP. I asked for a quote based on 17k miles per annum however the salesman suggested that I base it on 12k per annum to bring the monthly rental down, and then when I am 2 years into the 3 year agreement, ring up the finance company to change it to 17k.
Now, I have seen on another posting that this is possible to do depending on the finance company and the rentals in the 3rd year in my case will go up, however, will the new rentals take into account that I will have done 34k after 2 years rather than 24k and balloon upwards, or will the rentals increase to take into account only that the third year will be at 17k?
I was very dubious that they will not do the former and I have asked for a copy of the terms and conditions where this states that this is possible!
Many thanks in advance for your thoughts!
29 November 2016 at 10:16 am #101204
Hi Paolo. If you plan to do 17,000 miles per year then get a PCP with that mileage. The salesman is not acting in your best interests here – he knows that the higher mileage will put your monthly payment up significantly and he is trying to sell you an expensive motor car…
Many finance companies will allow you to increase your mileage allowance without penalty (Mercedes-Benz Finance used to; can’t guarantee that they still do) during the term, however it will raise your monthly payments by a huge amount if you wait and do it after two years.
You need to work out what your mileage is likely to be at the end of the agreement, as that is what Mercedes-Benz Finance will be looking at when they assess your excess mileage charges.
The other issue with underestimating your annual mileage is that if you need to sell the car before your three years are up, you will have considerable negative equity because your car is depreciating faster than you are repaying the finance. The extra mileage will diminish your car’s resale value below normal levels, and if you need to sell it then you will have an expensive problem.
Do not trust the salesman’s advice; he is trying to sell you the most expensive car for your monthly budget, and he doesn’t care that he is screwing you further down the line.