[rich100]

Quick question with regards to pcps. Not financed a car in this way before and just curious with regard to the GFV.

Is this figure what I would normally expect to get from the dealer if I traded the car in at the end of the plan or Am I likely to get a bit more than this i.e is the figure likely to be very accurate or is is likely that the market value will be higher than the GFV?

Hope this makes sense and just wondering what peoples experiences have been with these schemes.

Thanks

[Tengocity]

Ideally the GFV should be the value of your deposit plus the value of the car at that time and mileage. Often deals are made to look better by having a high GFV, which erodes your deposit. The way round this is to keep the deposit minimal I suppose.

Some like the GFV as it gives a backstop to how much you can lose in depreciation.

[NISFAN]

That is a crystal ball question. If your term ended in late 2009/early 2010, you would have been offered nothing remotely close to the GFV. Now called FV as there is no guarentee about it.

However, it also depends on the marque, with Mercedes for example you will be lucky if the car is worth the FV, with BMW they normally are a little safer with their valuations.

Main thing to remember, is that there is no guarantee there will be equity in it at the end, so is prudent to expect this.

[Xplosiv166]

Hi,

IMO Generally with the cheaper lower spec cars you will find you may be in negative equity because there are more sold and thus the used car price goes down.

Most of the time if you PX for anther BMW you will get more, but there are no grantees.

E.g. i have a E92 with 40K on the clock the GFV is approx £16 i got £20K when i PX the car. This could have been subsidised by the dealer to keep me happy (as in they moved some of the discount for the new car into my PX so it looked like i was getting more money for my car).

When shopping around i was looking at maybe 2K equity in my car, i could have sold the car myself for around £22K but i would have needed to buy the car off BMW first to make selling privately easier.

Hope that helps

[Xplosiv166]

NISFAN:

Yes but the "optional final payment" at the end of the PCP term still means that i can hand in the keys back and walk away or buy the car at that price? or try and sell the car yourself and keep any equity you may have


*** EDIT ***
From BMW UK Website:

Select your BMW of choice from our BMW model range
Decide on a repayment period that’s right for you
We agree on your maximum annual mileage
We provide a Guaranteed Minimum Future Value (GMFV) for your BMW, which becomes your final payment should you choose to keep your BMW at the end of the agreement
We agree a deposit and a regular monthly payment to suit your budget
At the end of the agreement you can select from one of the following options:
- Keep the car by paying the optional final payment*
- Part exchange your BMW for a new one**
- Hand the BMW back to us***

*The optional final payment and an option to purchase fee are payable at the end of the agreement if you decide to purchase the vehicle.

**If you part exchange the vehicle for a new BMW, any surplus in the vehicle’s part exchange value over the optional final payment and option to purchase fee can be used as a deposit towards your new BMW. If the vehicle’s value is less than the optional final payment, you don’t need to worry as you can hand it back to us and not make this payment. A new agreement will be subject to status.

***Excess mileage charges and excess wear and tear charges may be payable upon return of the vehicle.

Benefits of BMW Select:

Fixed regular payments
Making it easy to budget.
Get more BMW for your money
The payments will probably be less than you think, so you may decide to upgrade or add some optional extras within your budget.
Change your BMW every two to four years*
By changing your car regularly you'll spend less on repairs and maintenance.
There's an optional final payment at the end of your agreement
Benefit from reduced regular payments.
Your car has a Guaranteed Minimum Future Value (GMFV)
There is no need to worry about depreciation.^
Drive the BMW you want and keep your options open. You choose what to do at the end of your agreement
Part exchange your BMW for another one*, keep it** or return it to us.***

Worst case you could end up with no car and no equity with the PCP, as you always have the option to walk away at the end of the term.

[Dunzzy]

In my experience with BMW if you take good care of the car you will always get a pX value higher that GFV if you run the agreement close to the end of the term.

PX too early and you could be in negative equity simply because vehicle depreciation is steeper in the earlier months and generally reduces as the vehicle ages.

Its in BMWs interest that future customers do not go into negatives equity and have enough equity in the deal to make at least the minimum deposit to sell you another vehicle without having to contribute cash. These PCP deals are generally structured to keep you as a repeat customer.

[NISFAN]

Originally Posted by Xplosiv166

NISFAN:

Yes but the "optional final payment" at the end of the PCP term still means that i can hand in the keys back and walk away or buy the car at that price? or try and sell the car yourself and keep any equity you may have.

Yes, at the end of the contract, you can assess whether there is equity in your car. If there isn't you notify the finance company and they arrange to collect the vehicle. No extra costs to you.

If there is positive equity, it obviously makes sense to 'get hold' of it, and you can do this by selling privately, PX'ing, etc.

If you hand the car back, no positive equity will be paid back to you. Same for unused mileage, no credit given. Over mileage, yep you pay the contract pence per mile over the agreed amount.

You can also VT (voluntary termination) after 50% of the total costs are paid (this includes your deposit). For example you buy a £50k car, the finance charges are an additional £5k, total is £55k. You put down a £7k deposit with 48 monthly payments of £1000. After 21 payments (£21k + £7k deposit) you can hand the car back under a VT. Nothing more to pay.

Hope this helps

[GEP77]

The GFV tends now to be much lower for a given purchase price than a few years ago, according to the finance guys at my local dealer there were a large number of cars returned during the credit crunch where the owner just didn't want the car. Because of relatively high GFV values in the preceding years there was a lot of negative equity in the car. However due to the finance agreement these cars could just be returned to BMW. As a result BMW lost out quite a bit, to the tune of several thousand pounds per car. Hence why the GFV tends to be quite low now. Obviously if the used car market holds up well then they will provide a nice deposit come trade in time. But I suspect they are fairly realistic, especially if finance deals remain like they are now.

[rich100]

Thanks a lot guys, as usual all extremely helpful responses