To all PCP buyers from March 1st

robo1million

robo1million

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All,

Hope nobody got carried away with getting into the car ASAP and read the finance docs thoroughly...

On going through mine I noticed that the GMFV had been increased by ~£200 without them saying anything...

Might not make a difference if you are planning on handing back and walking away but I said I wasn't happy and got them to give me the difference as a cheque.

May be worth having a double check... Worst case is that it's a few tanks of fuel...

The explanation was that the campaign has changed since Q4 2013. Although my argument was that it wasn't the figure I agreed when I signed the order forms...
 
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Would an increase in GMFV not result in a slight reduction in monthly payments?
 
That doesn't seem to add up. If the gfv went up my £200 depending on rate there should have been more than a few pence difference. I would check your docs too to bottom cause regardless of gfv, if the rate was the same then you would be paying the same if you complete the agreement and keep at the end
 
I agree with you what you are saying but I can only base it on the figures in front of me. The other explanation is that the finance percentage has changed which would offset the higher GMFV - the rate on the paperwork is 6.9%, I don't have it written down anywhere but I seem to remember that the percentage was 6.4% ish??? Don't know how I will be able to get them to adjust this!?!?
 
Not sure then but if you're happy with monthly payment and they have given you difference on gfv sounds like alls good. Just doesn't add up.
 
As coincidence they have just called me so I asked the question. It seems as though due to the deal being a PCP if I finish early anyway they don't charge 30/60 days extra interest cost so I don't think it makes a difference...

Not had a PCP before so trying to get my head round the actual financial consequences of what they have done - FYI it is written on my order form in big capitals "Q4 campaign".
 
The whole GMFV value is a bit of a con. The future value they put on the car is always much much lower than in real world terms and they make a lot of money out of it.
 
I had a similar thing, but they said so and offered a tank of fuel to make up for it (difference was £40)
 
Actually mine was in monthly payments rather than GMFV - they went up by about 80p which worked out at ~£40 over the length of the agreement
 
robo1million said:
Ermmmm not sure I agree 100%. Can be helpful to ensure there is a means of deposit available for the next car...
Click to expand...

Never having had a PCP up until now, how close to the GMFV do they usually value your vehicle at if you come to trade it in?

I'm assuming their hope is that you have sufficient equity in the vehicle providing the mileage isn't far in excess of what you predicted, so that you take another vehicle again and again.

A lad at work bought a new Volvo V40 at Christmas. I asked what mileage he put down on his PCP and he said 6000pa. Within two months he's already exceeded that. He said the Volvo dealer said don't worry about the mileage, just trade it in for a new one. I suspect this is going to leave him with big negative equity on it?
 
Migwire said:
Never having had a PCP up until now, how close to the GMFV do they usually value your vehicle at if you come to trade it in?

I'm assuming their hope is that you have sufficient equity in the vehicle providing the mileage isn't far in excess of what you predicted, so that you take another vehicle again and again.

A lad at work bought a new Volvo V40 at Christmas. I asked what mileage he put down on his PCP and he said 6000pa. Within two months he's already exceeded that. He said the Volvo dealer said don't worry about the mileage, just trade it in for a new one. I suspect this is going to leave him with big negative equity on it?
Click to expand...

The general impression I got was that the GMFV is always lower than actual final value. This puts you in the good position of having equity in the car when you come to trade in, which in turn I think makes the dealers think that you will be more inclined to take out a new agreement as you have a decent deposit to play with.

I think the lad with the V40 is going to be in a sticky position as either a) he will have a huge mileage charge to pay if he wants to hand the car back or b) the GMFV will not be applicable and he may be left with no deposit to work with and potentially an extra payment to make due to excess mileage...

Will be glad to be proven wrong anyway....!!!
 
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GMFV is usually lower than the final value, because the finance company are guaranteeing the value, and therefore HAVE to be conservative. If the car is returned completely beat up and worth much less than the GMFV, it's down to the finance company to foot the extra on it, so they naturally set them low to account for this and give a bit more buffer for them - which in turn puts more of the financial burden on the buyer, because of the increased monthly cost. The upside of it is that if you do look after the car and it is worth much more than the GMFV at the end, the buyer will get those extra monthly payment amounts back in a private sale and has that to use on a deposit for a new car (or whatever else they want to use it for). It's just the finance company's way of reducing the risk for them of someone not looking after the car, and shifting it on to the buyer instead.
 
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A quick google turned up this: Marshall Nottingham - Volvo V40 R-Design Available With 3 Years Free Servicing, £589 Deposit & 5.9% APR*
There's a 14.9p per mile excess mileage charge there plus "Based on 6,000 miles per annum. excess mileage charged at 14.9p per mile for the first 5,000 miles and twice that thereafter."
If he's done 6k in 2 months that gives him an annual mileage of about 36k, or 90k excess miles at the end of 3 years. So about a £26k charge if he wants to hand it back. I reckon he's going to be stuck with it...
 
No big deal, he'll just have to buy it outright at the end of the term and sell it privately. It'll probably be worth at least the settlement figure, so shouldn't be in negative equity.
 
I wouldn't be too sure at a 3 yr old car with over 100k on the clock when the GMFV is based on 18k. I think it's a safe bet he will be in negative equity....
 
Didn't realise the settlement figure was £18k....in that case he's f****d!
 
Not £18k...... They're basing the future value on the fact the car is due back in three years time with 18 k on the clock
 
Just looked at the ad and the GFV is £10k, so he'll probably be ok. He'd stand more chance with an Audi though.

I was in a similar position with my old Golf (albeit I hadn't exceeded the agreed mileage to that extent...80k vs 30k agreed for the term) and my car was still worth more than the settlement figure.
 
squiretolley said:
Just looked at the ad and the GFV is £10k, so he'll probably be ok. He'd stand more chance with an Audi though.

I was in a similar position with my old Golf (albeit I hadn't exceeded the agreed mileage to that extent...80k vs 30k agreed for the term) and my car was still worth more than the settlement figure.
Click to expand...

You went 50k over the top and still weren't in negative equity? Really? I'm panicking because I've signed my finance based on 12kpa and noticed on my mot's from my current car I've done 13500 miles in the last year!
 
I wouldn't worry too much about 1500 miles.... Audi excess mileage isn't as expensive as that either but I I think it will easily be covered by the true final value.
 
You only need to worry about the excess mileage charge if you hand the car back at the end, but noone in their right mind would do that (unless you have REALLY treated it so badly that it's worth less than the GMFV!)
 
I wouldn't panic - my agreement is for 6000 miles (the lowest they would do) and I do ~18,000 a year
 
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No, but I can't say I'm excessively worried about it really. In my experience the final payment is set with so much buffer room that it more than covers any deprecation in value from the extra mileage.
 
robo1million said:
I wouldn't worry too much about 1500 miles.... Audi excess mileage isn't as expensive as that either but I I think it will easily be covered by the true final value.
Click to expand...

Indeed I think it's around 8p/mile from Audi - I recall it being single digit pence at least, so way cheaper than Toyota.
 
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