Mini Select - chaging mileage allowance?

[bensidewalker]

Hi all,

I wondered if anyone has changed/tried to change the mileage allowance under a Mini Select agreement? I think I underestimated slightly how much mileage I'd cover and would like to amend it. I flicked through the Mini Select pack I got when I signed up, and there was a table of charges which said changing the mileage woud cost £100, but I wanted to know if there would be any other implication, e.g. the 'balloon' payment at the end increasing etc?

Any help would be appreciated.

[Martin F]

If you increase the monthly payments because you have altered the estimated mileage, the baloon payment will decrease. But I think you need to do the sums to see whether it makes sense if you have to pay £100 for the privilege.

You need to look at the charge you will incur if you hand the car back with excess mileage. Obviously if you decide to keep the car and pay the baloon payment, or trade it in( assuming you have some equity), which has the same effect the excess mileage charge does not arise. It will only hit if you decide to hand the car back and walk away at the end of the deal.

[bensidewalker]

Thanks for the reply Martin, but I do not want to increase my monthly. I actually didn't know that the excess mileage only kicks in if you decide to hand the car back. I think I am most likely to trade it in; how does that work exactly? From what I understood, the guaranteed minimum future value is the part-exchange value, and if the car is worth more than that at the time of trade-in, that excess goes down as a deposit. Is that correct?

[Martin F]

Yes. If you trade it in, in effect the first part of the trade in value goes to satisfy the balloon payment so that the finance is fully repaid and the balance is your deposit against your new car.

The balloon payment is normally set at a lower level than the expected value of the car at the end of deal. This is intended to provide an incentive for you to return to the dealer to buy another car using your equity as a deposit. It also helps protect the finance company from a loss if you walk away.

However, in this recession second hand car prices have suffered and some people have found it cheaper to walk away as the second hand value was below the balloon payment.

This is less likely to happen with a deal negotiated now so it is fairly unlikely that you will be better off walking away and the excess mileage charge is therefore unlikely to arise..

[M.O.S]

To be fair the excess mileage is only 3p a mile usually. It often works out better to just pay the excess mileage fee

[bensidewalker]

So Martin, if u trade my car in, the guaranteed minimum future value is just used to finish off the loan? I.e. It is not used towards a new car? So if let's say the value was 10k and the car was actually worth 12k, I'd only get 2k towards the new car?

[bensidewalker]

Hmm, just read the outline of Mini Select on the Mini website...I seem to have understood it wrongly; sucks! Thought I'd only have to pay the difference between the guaranteed future value and the price of the new car. Seems it is not so. Also, I got my car 18 months ago, so will probably in negative equity in 2.5 years' time!

[Martin F]

Quote: Originally Posted by bensidewalker (original)

So Martin, if u trade my car in, the guaranteed minimum future value is just used to finish off the loan? I.e. It is not used towards a new car? So if let's say the value was 10k and the car was actually worth 12k, I'd only get 2k towards the new car?

Yes, exactly.

[Martin F]

Quote: Originally Posted by bensidewalker (original)

Hmm, just read the outline of Mini Select on the Mini website...I seem to have understood it wrongly; sucks! Thought I'd only have to pay the difference between the guaranteed future value and the price of the new car. Seems it is not so. Also, I got my car 18 months ago, so will probably in negative equity in 2.5 years' time!

I am afraid that is possible as GFV's set 18 months ago were probably a bit high. But it is hard to know until nearer the time.

I think, if I were you, I would stick with my present payments and mileage and see how it looks nearer the end of the agreement.