PCP Excess Mileage & Wear Charges: Reduce Your Bill

Getting close to the end of your PCP agreement? There are two big things that decide if you will pay more when you give the car back. These are excess mileage charges and what counts as fair wear on the car. This guide will help you see how these costs be worked out. You will find out what is classed as fair wear. You will read how to get your car ready. You will also get ways to cut down the cost, whether you give the car back, do part-exchange to get your next car, or pay the balloon payment and keep it.

You will see examples with numbers, checklists, and an easy-to-use table to help make choices. The guide will also remind you to look at car finance offers before you pick what to do next. How you handle the mileage and the car’s state now can help you pay less for your next PCP plan.

Where excess mileage fits in a Personal Contract Purchase

A personal contract purchase, or PCP, works out your monthly payments by looking at the car’s residual value at the end of the contract. This value is called the guaranteed minimum future value, minimum future value, GMFV. They all mean the same thing. The GMFV is set by using the basis of an agreed annual mileage limit. It expects you to use the car as most people do, so the mileage you put on it each year will help decide this value.

If what you see on the odometer goes over the set mileage, you will need to pay an excess mileage fee at the end of your agreement. If you drive within the allowed mileage and bring back the car in good condition, you can return it. There is no balloon payment in this case. If you wish to keep the car, you need to pay the balloon payment.

What is an excess mileage charge on PCP?

When you say yes to a PCP, you choose how many miles you will drive each year. The options are often 8k, 10k, or 12k miles. At the end, you give the car back to the lender and they read your odometer. If you have gone over the mile limit in your PCP contract, you will have to pay a fee for every extra mile. Most of the time, the lender charges from 8p to 20p for each extra mile. For some special cars, the fee can be higher.

How your mileage allowance is calculated

• Contracted annual mileage × term (years) = this shows you your total mileage allowance.
• Actual odometer at return − allowance = this tells you the miles you went over if the number is above zero.
• Miles over × rate per mile = this helps you know your excess mileage charge.

Worked example (illustrative)

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Does excess mileage matter if I buy the car?

If you pay the balloon payment at the end of your contract and decide to keep the car, you usually do not have to pay for higher mileage. But higher mileage will lower the residual value. This means you might get less money if you sell the car or do a part-exchange right away. If you plan to keep it for the long run, having too many miles on the car only affects how much you get when you sell it. It does not change what you pay when you give it back.

What counts as “fair wear & tear”?

Most UK lenders follow BVRLA standards. “Fair wear” is about the small things a car gets from normal use. It could be little marks that happen over time. “Damage” is different from fair wear. This is for things you should watch out for, like big scratches, dents, broken glass, things missing, or repairs that were not done well. This is how lenders in the UK view fair wear.

Common areas that attract charges if beyond fair wear

• Bodywork & paint: The car can have dents or lines. You might see spots where paint is gone, and you see the metal or primer. Some fixes to marks may look bad.
• Wheels & tyres: The wheels can look scratched or bad. Tyres might not have more than 1.6 mm tread.
• Glass & lights: A window could have a big crack or chip. A light cover might be cracked. A warning light may be on.
• Interior: There could be tears, burns or deep stains inside. A parcel shelf or load cover may not be there.
• Service & keys: The car might not have the service history. A spare key could be gone.
• EV items: A charging cable might be gone, even if the car should have it.

Handback inspection timeline (the stress-free version)

8–10 weeks before return

• Read the terms of the agreement. Make sure you look at the rules about mileage and wear.
• Book a pre-inspection if the dealer will do this for you.
• Get two trade valuations for a part-exchange Plan-B.

3–4 weeks before return

• Fix things that do not cost much. You can the get smart-repair on wheels, repair chipped areas, change tyres if they are almost gone, or check the warning lights.
• Get both keys, all manuals, the service book, locking wheel nut key, SD cards and navigation cards, charging cable if it is an EV, and your parcel shelf.

7–10 days before return

• Do a full valet or detail for the car. Take pictures of every part. Make sure the pictures show the time they were taken. You need to get photos of the wheels, the glass, inside the car, and the odometer.
• Check when you will get or give back the car. Also, tell them what you think the mileage should be.

On the day

• Go to the inspection. Ask if the team marks anything on the car that is more than fair wear.
• Take photos of the condition report and the odometer.

Can you change your mileage mid-term?

Often, yes. A lot of car finance agreements let you pick mileage extensions or let you change to different mileage allowances during the time you have the car. A mileage uplift means you get more miles for the rest of your months left in the plan. This can help you lower any extra charges at the end of the agreement. It’s a good idea to ask about this early. If you wait until later, it may not change the total amount you have to pay that much.

PCP vs Contract Hire (lease): how mileage & wear differ

• PCP finance: At the end of the contract, you can pick from three options. You get to pay the balloon payment and keep the car. Or, you can give it back, if the car is within fair wear and within the mileage limit. The last thing you can do is part-exchange the car. You only pay excess mileage if you return the car.
• Contract hire (lease/PCH): This is a true lease. You give the car back when the lease is over. Mileage and condition charges are normal if you go over. There is no balloon payment at the end of the contract.

What are typical end-of-contract charges?

Budgeting for the long run (so there are no unexpected costs)

Your finance agreement sets out your monthly payments, but you need to know that things like extra fees and small fixes can make the total amount higher. It is smart to set aside money for a “handover pot.” This can help you pay for tyres, a quick repair, or extra miles. If your driving patterns or driving habits change, and you start to do more miles (like driving a different way to work), ask about a higher mileage allowance. It is better to pay for a higher mileage allowance at the start than to think your mileage will stay low.

Should I fix damage myself or accept the bill?

The ranges you see below are just some examples. You need to look at your own prices and read your contract.

Strategy: hand back vs part-exchange vs keep

Setting the right mileage on your next PCP

Here are two choices a driver can take with PCP if they drive about 12,500 miles each year. You do this on a PCP deal that lasts three years.

This example is something that a lot of drivers can relate to. Paying a bit more each month with your monthly payments is easier for most people. It is much less hard than having to pay a big amount in one go.

Quick prep checklist (copy & tick)

• The service history is complete and the receipts are kept together.
• There are two keys. Both keys work well.
• The tyres have at least 1.6 mm of tread. The tyres on each axle match.
• Any chips are fixed. The lights are good. There are no warning lights.
• The wheels get smart repair if the kerb damage is bad.
• The inside is cleaned. A parcel shelf or load cover comes with it.
• The charging cable for EVs, SD card, and manuals are all there.
• Daytime photos are taken. A report on its condition is pictured too.

Example costs you can model (illustrative)

Taking a few small steps before the end of the agreement can help you save money. A little planning will let you cut additional costs by half. This will also help you avoid any unexpected costs when the agreement ends.

How do PCP excess mileage and wear policies differ by brand or finance company?

Most personal contract purchase deals work in a simple way. They use a guaranteed minimum future value, which depends on things like an agreed annual mileage limit and what they think is fair wear. But car finance companies, the ones from the car makers and the ones not connected to makers, can be different when it comes to some key details.

Bottom line: Car providers will have different terms of the agreement for you. Be sure to read all the details about mileage and wear that are in your finance agreement. It is good to think early about what mileage allowance you need. If you feel you will drive more, you can ask for a higher mileage allowance. You may also check your car before the end of your contract or keep some money ready for small repairs. Doing this can help you avoid unexpected costs because of mileage when your contract ends.

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Do I have consumer rights if excess mileage or wear charges seem unfair?

Yes. If you feel that the end of the agreement bill is not right, there are ways for you to take action. These steps the company offers help protect you.

1) Check the basis of the charge

• Mileage: Do the calculation one more time. Make sure that the odometer number is the same as what you get when you multiply the allowance by the term. Ask the lender what the exact rate is for each mile. Also, find out if the VAT is included in this rate.
• Wear & tear: Ask the lender to use the BVRLA category, like “dent with paint break,” and to show you exactly where that issue is on the panel and how big it is. You should also ask to see the inspection photos.

2) Share your evidence

• Take clear photos during the handback day and do it while there is sunlight. You need to get pictures of all corners, the wheels, the glass, the inside, and take one of the odometer.
• Keep all service slips, invoices for tyres, MOT records, and the proof if you got missing items.
• Write all things you see that are not the same when you look at the report and see the car’s real condition.

3) Make a written challenge to the lender

• Quote the right pages from your finance agreement when you talk about mileage allowance, the BVRLA guide, and the missing-item list.
• Say why you think the item should count as fair wear. Or explain why you feel the mileage has been counted wrong.
• Offer a way to sort things out. For example, agree to X or argue against Y. Make sure to keep your monthly payments up to date while the issue is still being sorted.

4) Escalate through formal complaints

• Lender’s complaints team: You can ask the lender’s complaints team for their steps to deal with complaints. You can also get a final answer from them about your complaint.
• Financial Ombudsman Service (UK): If you do not feel good about what the lender says, or if you wait 8 weeks without a clear answer, you can bring it to the Ombudsman. The Ombudsman will check your complaint for free and make their own decision. They look at problems about consumer credit in the UK, like PCP, mileage, and wear on cars.
• BVRLA ADR: If the supplier or finance company is part of BVRLA, which is common with contract hire/lease, you can ask them for help if there is a problem when you give your vehicle back. This deals with UK finance company issues about lease and contract hire.

5) Practical tips that help cases

• Keep all messages in writing. Ask them for a detailed breakdown and the basis for each charge.
• If you fixed anything before you sent the car back, include those invoices.
• If you feel that the car is rated wrong, like if a light scuff is counted as a full repaint, ask them to look at it again.
• If you get a goodwill waiver for taking a new PCP deal, make sure this is in your new order or in the PCP finance papers.

Template you can adapt

“I’m querying the PCP excess mileage/wear charges on agreement [ref]. Please provide the itemised calculation, the per-mile rate applied, and inspection photos referencing the BVRLA categories used. I attach my dated photos, service and tyre invoices. Based on the terms of the agreement, I accept items [A/B] and dispute [C/D] for the reasons set out. Please review and confirm your revised total amount, or issue a final response so I may escalate.”

FAQs About PCP Excess Mileage & Wear

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