Finance - again

[evenflow]

Hello all

This is not intended to be a discussion on the rights and wrongs of car finance

I was looking at financing a second-hand 1M over 48 months. The GFV is £10k. For a car that has not really depreciated, indeed, has maybe even appreciated, this seems incorrect. Do finance companies just apply very broad rules, or do they take into account specifics?

thanks.

[Andy665]

The GFV is not necessarily meant to be an accurate reflection of the cars value at the end.

Whatever its set at does no harm to a buyer, if its set low the payments go up but whatever the car is worth over and above the GFV is the customers

If the GFV is set too high and the car is not worth the GFV then the loss is the finance companies

Only issue here is whether the GFV being low makes the payments more than you feel comfortable with - you are not being put in a bad position

[IanCress]

It depends what you want to do at the end of the 48 months. Do you intend on handing it back, or keeping the car?

If what you're saying is correct, then keeping the car would be the best option, as it should be worth more than £10k at the end of the term. Will you be in a position in 4 years where you are able to stump up a £10k lump sum?

[Andy665]

IanCress said:

It depends what you want to do at the end of the 48 months. Do you intend on handing it back, or keeping the car?

If what you're saying is correct, then keeping the car would be the best option, as it should be worth more than £10k at the end of the term. Will you be in a position in 4 years where you are able to stump up a £10k lump sum?

Even if OP can't afford to make the £10 final payment they retain the right to sell the car and retain any value over and above the GFV

[mcflurry]

If the car's worth more than the GFV then trade it in and use the equity as a deposit on the next car? Or keep it

IANA-car salesman

[rfoster]

Finance companies will err on the side of caution with guaranteed future values - particularly on the rarer cars such as the 1M as they are really not sure what the vehicle will be worth at the end of the term.

We have many customers who have found themselves in a similar situation (often Porsches to be fair) where the guaranteed future values are considerably lower than prices that similar cars are being advertised for.

The finance companies aren't going to guarantee to pay you back what you think the car will be worth I'm afraid. So at the end of the agreement you'll be in a position of considerable equity if the car values are as you expect.

[cheerfulcharlie]

I guess it depends upon how much risk the finance company are prepared to take. I'm looking at changing at the moment and GFV's have varied from 40% down to 25% depending upon the marque. There are always other finance companies who may offer a better deal (to you).

[cheerfulcharlie]

I guess it depends upon how much risk the finance company are prepared to take. I'm looking at changing at the moment and GFV's have varied from 40% down to 25% depending upon the marque. There are always other finance companies who may offer a better deal (to you).

[evenflow]

Charlie - can you recommend any that might be more towards the 40%?

[chrispmartha]

I wouldn't look at it as a GFV more of a final payment, pcp on used cars tend to have s lower 'gfv' I think.

[nshooter35]

Are there any major downsides on getting PCP finance on a used car compared to a PCP on a new car (apart from that the interest rates will be higher)?

[Pugland53]

evenflow said:

Hello all

This is not intended to be a discussion on the rights and wrongs of car finance

I was looking at financing a second-hand 1M over 48 months. The GFV is £10k. For a car that has not really depreciated, indeed, has maybe even appreciated, this seems incorrect. Do finance companies just apply very broad rules, or do they take into account specifics?

thanks.

When I bought my 1M new, the gfv on a 4 year PCP was around £14k. I remember saying to the finance guy at the time it'll be worth a lot more than that at 4 years old. He agreed, although neither of us would have guessed that they would hold their value as well as they have.