# What is logic behind time value money

## How to calculate the compensation for use correctly!

### December 01, 2006 | Withdrawal from the purchase contract

If the car buyer is entitled to withdraw from the purchase contract (formerly: "conversion"), the question of correctly calculated usage compensation for the kilometers driven arises when billing. In the following, we will tell you how to calculate the usage fee.

The first thing you have to internalize: The settlement after the withdrawal is not a buyback at current value. The legal logic behind the compensation for use is: everyone gives back what they have received. The buyer returns the car, the seller the money. But the buyer also has to - figuratively speaking - return “the kilometers driven”.

It is assumed that the purchase price is the equivalent of all the possible kilometers. Before the first kilometer, the vehicle has the value represented by the purchase price and after the last technically possible kilometer the value is zero.

### It depends on the expected mileage

In the 1970s, the rule of thumb arose for new cars: the buyer has to deduct 0.67 percent of the new price for every thousand kilometers. At the time, it was assumed that cars would be "ready to go" after 150,000 km. This means that 1,000 driven kilometers were 0.6666 percent (rounded up 0.67) of the imaginable car life.

From the point of view of compensation for use, it is anything but gratifying for the car dealer, but there is no avoiding the fact that cars today last longer than 150,000 km. The inspection intervals for some models are already 50,000 km.

Based on an updated rule of thumb, the jurisprudence now assumes that “everyday vehicles” last 200,000 km, representatives of the upper middle class 250,000 km and cars from the upper class even 300,000 km. Mind you: It's about total devaluation, not about starting necessary repair work.

### Roughly calculated, finely calculated

If you calculate in 1,000 km steps, that means 0.5 percent for the smaller, 0.4 percent for the higher-end and 0.33 percent for the very large-displacement vehicles.

If you want to determine the amount to be credited to the cent, the formula for new cars, which the Federal Court of Justice also uses, is:

### Formula for compensation for use of new vehicles

 Purchase price x kilometers traveled Expected mileage

This formula is used to correctly determine the compensation for use. Practice shows, however, that the outdated figure “0.67 percent” has become so firmly established in people's minds that billing on this basis is often accepted even by buyers advised by lawyers. It may be worth a try.

### Nothing else applies to used vehicles

The principle is the same for GW. Here the buyer acquires a reduced remaining mileage for the lower purchase price compared to the new car.

So if the used car would belong in the drawer “lasts 250,000 km” as a new car and if it already had 100,000 km of its car life behind it at the time of purchase, then the buyer buys the remaining 150,000 km for the remaining price. If you have driven another 1,000 kilometers, that is 0.67 percent of the remaining life.

In the case of GW, the kilometers driven must be deducted from the expected mileage. This gives the expected remaining mileage. Then the ratio to the GW price is formed:

### Formula for the usage compensation at GW

 Used purchase price x kilometers traveled Expected remaining mileage

### Sometimes months instead of kilometers

For vehicles that “die” from age rather than from mileage in everyday life, case law assumes a time-dependent compensation for use (OLG Düsseldorf, NZV 1995, page 69).

For example, the useful life of a motorhome is 120 months. If the withdrawal is processed after six months, the buyer has used five percent of the service life and must therefore deduct five percent of the purchase price. In the case of motorcycles, the service life depends on the type of motorcycle.

Conclusion: The more the durability of the cars increases, the more expensive the cancellation statement becomes for the dealer. That is regrettable, but owed to the logic of the reversal. The value doesn't matter.

Source: Edition 12/2006 | Page 17 | ID 85331