clarification needed

clarification needed

Author
Discussion

happychap

Original Poster:

530 posts

147 months

Saturday 18th October 2014
quotequote all
I'm considering buying a used Mini from a main dealer. Looking at the Select Finance offer where you put a deposit down then make 36 payments I'm unclear about the guaranteed future value part. If for example after 36 payments I decide to change the car for a newer one rather than paying this final GFV, do I have to pay the GFV part off or can that amount be used as a deposit on the next car.

EssexIan

135 posts

282 months

Saturday 18th October 2014
quotequote all
I think this is how it works:

At the end of the agreement you either pay the GFV and keep the car or give the car back and walk away, if the car is worth more than the GFV then you keep the difference. That sum of money can then be used as a deposit not the whole GFV, the dealer may be a little more generous in the valuation if you are looking at another car.

Hope that makes sense.

Ian

happychap

Original Poster:

530 posts

147 months

Saturday 18th October 2014
quotequote all
Thanks for the reply. That's what I thought, when you break it down its not that good a deal once you look beyond the low monthly cost and the deposit. If you walk away after the given term you will in effect have leased the car for and have nothing to show for it.

SteveS Cup

1,996 posts

159 months

Sunday 19th October 2014
quotequote all
That's exactly how it works and it is a good scheme if you have got the £££££'s readily available.

Youre effectively paying the depreciation. Comparing it with buying a new car and selling it in 3 years is the only fair comparison.

You'll obviously be a lot better off buying a used vehicle financially but having a new car is a lovely thing! I went through every option with the gf when looking for a new car. For her the peice of mind of having a comprehensive warranty and the feel good factor of a new car made it worth while. I would of bought a 2 year old car and owned it.