A Case Study on Mileage Caps in Car Finance Agreements

When entering into any financial agreement, it’s essential to understand all the terms and conditions involved. The importance of this is well illustrated by a case investigated by the Financial Ombudsman Service (FOS) regarding a consumer who was charged for exceeding the mileage cap on her car finance agreement.

Claire’s Circumstances:

Claire had entered into a three-year hire purchase agreement for a new car. At the conclusion of the term, she was surprised with an invoice for £2,000 due to exceeding the mileage cap stated in the agreement—she had driven 28,000 miles, surpassing the 18,000-mile limit over the three years.

The Complaint:

Claire contested that she was not made aware of the mileage restriction when she signed the agreement. Her decision to enter into the contract was influenced by her monthly payment budget, with no discussions around mileage limitations. From her previous experiences with hire purchase agreements that did not involve excess mileage charges, she assumed similar terms. Claire’s annual driving requirement was more than the 6,000 miles per year limit, and she asserted that had she been informed of such a restriction, she would have not entered into the agreement.

The Investigation:

Upon reviewing the complaint, the FOS acknowledged that the hire purchase agreement did clearly indicate an annual mileage cap, which Claire had signed. However, evidence from Claire’s history with her previous two hire purchase agreements, her car insurance declaration, and the usage of her old car, supported her claim that she had not been informed about the mileage limit.

FOS’s Decision:

The FOS found it plausible that Claire was not aware of the mileage cap in her agreement and determined that the credit broker had failed to highlight this significant term. In resolving the complaint, the FOS directed the finance provider to waive the majority of the excess mileage charges. Nevertheless, it ruled that Claire should be responsible for a minor portion of those charges, reflecting the higher payment she would have agreed to for her actual mileage needs.

Key Takeaways for Consumers:

  • Always review your car finance agreement in detail, paying particular attention to any mileage caps or other restrictions that may result in additional charges at the end of the term.
  • If something is unclear or not discussed, seek clarification before signing the agreement.
  • Keep records of your driving habits and needs to ensure they align with the terms of any new car finance agreement you consider.


This case study serves as an educational guide on the significance of understanding all the terms of a car finance agreement, particularly mileage caps. Consumers should take proactive steps to ensure they are fully aware of the conditions they are agreeing to. This will help prevent any unexpected charges at the end of the contract term.

You can read more about this specific case study on the Financial Ombudsman Service website HERE.


This content is purely educational and is not intended as financial advice. If you find yourself in a situation similar to Claire’s, seeking professional advice may help you to understand your rights and options within the framework of your specific agreement.


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