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Model specific boards => Golf mk7 => Topic started by: karlak on 30 November 2016, 08:03
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My GTD is due to go back next May 2017. I recently visited a Dealer to see what could be offered on a new deal.
The problem seems to be with the Guaranteed Value of my GTD. The Sales and finance department could not understand why the figure was "so high". This obviously has a direct effect on my trade-in value, in fact it is so poor that their recommendation was to just hand it back and pay any excess miles, there was that much negative equity in it.
This is the first time I have had this problem with a PCP and all others have left me with something in the car at the end, or allowed me to end earlier than the contract period. I have raised a complaint with VWFS, but while I am waiting for them to come back with whatever excuse they can think of I would be interested if anyone else has a PCP ending around this time on a GTD (no point with any other model for this exercise thanks).
My feeling is that at the time my car was ordered in one sales campaign, but delivered in another, this affected the interest rate and somehow I think they have used the wrong GFV on my car.
mine is in a 5000 mile a year contract, but i always knew I would pay the mileage I go over and have that money set by and obviously accounted for that if we were going to trade, but the dealer thought we are so far out it doesnt come into it.
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Shouldn't it be a case of swings and roundabouts? With a higher GFV, you'll have paid out lower monthlies. Ultimately car car costs what it costs. Whichever way the figures are manipulated, you'll end up paying out the same amount over the time you are driving round in it. You may well find that what you have paid out over the term will equate to a pretty cheap car to run, even if you do just hand it back at the end of the term.
The fact that you have been paying out a lesser amount means that the time has come when you are going to have to fork out some more cash to fund your next car.
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Shouldn't it be a case of swings and roundabouts? With a higher GFV, you'll have paid out lower monthlies. Ultimately car car costs what it costs. Whichever way the figures are manipulated, you'll end up paying out the same amount over the time you are driving round in it. You may well find that what you have paid out over the term will equate to a pretty cheap car to run, even if you do just hand it back at the end of the term.
The fact that you have been paying out a lesser amount means that the time has come when you are going to have to fork out some more cash to fund your next car.
Yep and absolutely agree. This is my 5th PCP and so happy with the theories. But, I have been checking prices for the last few months and it was obvious my car was never going to get close. Another indicator was that at no point am I going to hit the magic 50% paid mark, which means I could hand back (if i wanted to).
I understand it is an equation, but for some reason the maths on this one just do not add up. I have realised this, as has a decent VW saleman (they do exist :) ) and also the finance team in the dealership.
But, for me to take this further I need to know what others GFV are for a similar car and time. If they have done something wrong, then I can take it further.
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I'd imagine that the residual values of all used cars have taken a downturn recently, especially with all the discounts/finance incentives on offer from manufacturers for new cars, and what was originally projected as a GFV for you in 2014 has turned out to be an overestimate
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Can someone explain this to me....
Guaranteed Future Value - the value of the car at the end of the 3 years yes?
If its "high" then how does that make any difference? Surely the difference between one GFV and the other is what you have paid (plus interest) over 36 months? The residual value in the car is never yours to worry about is it?
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Can someone explain this to me....
Guaranteed Future Value - the value of the car at the end of the 3 years yes?
If its "high" then how does that make any difference? Surely the difference between one GFV and the other is what you have paid (plus interest) over 36 months? The residual value in the car is never yours to worry about is it?
My last GFV of the vehicle was £1800 less than the sale price, so I had £1800 to put down a as deposit towards my next car. A high GFV takes away this option, at the end of the day the dealer would like to flip you into another PCP, having value in the vehicle at the end helps with this obviously.
This time round my car has such a high final value, that the dealer is recommending I just hand the car back. PCP way back when, was always a way of allowing the owner at the end if a contract to have choices, buy it, trade it, hand it back. I think what has happened is that the GFV values have been artificially made higher to entice people into a lower priced monthly deal. This obviously comes home to roost at the end of the contract. My Sons Fiesta at the end of his contract period allowed him to sell it for £1500 profit....
I havent really got a huge or major issue with this, was just curious to see if what I am being told is correct and that for some reason the "equation" on my contract has got some bad figures in it, either by error or by design. It may be the PCP bubble has burst and it is time to lease if you want a monthly budget to by a vehicle.
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Oooooh I see, if the GFV is less than the actual second hand price the garage will pay for it then you get the difference?
eg the GFV is £14k and the dealer's trade in offer is £15k then you get £1k in your pocket?
Do you have to actually fully purchase the car to own the difference or do they just transact that for you? I suppose technical VWFS own the car, not you or the dealership.
Sorry, I was interested to understand this as I'm probably being forced out of my company car scheme early 2017! Its been decades since I've owned a car!
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Oooooh I see, the the GFV is less than the actual second hand price the garage will pay for it then you get the difference?
eg the GFV is £14k and the dealer's trade in offer is £15k then you get £1k in your pocket?
Do you have to actually fully purchase the car to own the difference or do they just transact that for you? I suppose technical VWFS own the car, not you or the dealership.
Sorry, I was interested to understand this as I'm probably being forced out of my company car scheme early 2017! Its been decades since I've owned a car!
Yup, I could just buy the car if I wanted and then sell it on and pocket the difference. If a dealer takes it in against a new PCP, they then clear the finance and any difference between the GFV and what they give you, goes to the deposit on the new PCP.
As I got a very healthy discount when I got this GTD, this should all be helping me, but for some reason it is all upside down. If someone had a car at a similar age and deal as mine at say £14K GFV, whereas mine is £16K, then I would be able to start asking questions. My suspicion is still that there was some error, either human or computer which meant the wrong GFV was put on mine, otherwise it just doesnt make sense. Ofcourse, as I signed upfront to it all, I have pretty much no leg to stand on at the time.
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So, maybe the problem is dieselgate?
Is it that the GFV is too high or the trade in purchase price being too low?
Surely the willingness of the dealer to make a sensible offer for the car is going to effect these sums?
Just out of interest, what spec and mileage is your car and what did the dealer offer to pay for it? (If you don't mind me asking - I'm wondering what my car might be worth if I wanted to buy it from the lease company)
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Think you may just be a victim of dieselgate and a softening of the UK's love of diesels. I traded my GTD last January and broke even on my PCP, after about 2 years (GFV £13,225, settlement £15,319), but things were on the change, even then.
GFV's are just an educated guess, with an overriding slant on encouraging business. The perceived wisdom of early 2014 was that diesels were the eco way to go, with increasingly better emission controls and, therefore, rock solid residuals. This has all changed massively with the new recognition (on this side of the Atlantic, anyway) of the diesel NOx emission problem.
How far out are you, anyway? Ah, just read your later post and given my figures, above, I can see your point. Seeing that your deal was done around the same time as mine (March 2014), it is difficult to imagine why the 2 GFVs should be over £2K different! Hope you manage to negotiate a deal.
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I purchased my GTD at a similar time to you and started looking for a replacement about 4 months ago thinking that with some equity in the car and long lead times I should have a couple of grand in the bag for part X, but to my horror all the dealers were offering £2k less than the projected value come part X day.
Anyway I spoke with VW and they offered little in the way of explanation other than the GFV could have been raised to lower the monthly payments; thinking about it at the time it was the monthly figure that clinched it for me.
So I was left with a car worth £2k less than finance and like you they suggested I return it and just pay excess mileage.
Is it a coincidence VW are offering £2k incentive against new cars?
Anyway new Golf R ordered through Carwow, saved just over £6k including VW’s £2k, hopefully it should arrive this week and the old one goes back to VW and will go straight to auction so let them take the hit.
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Are they offering you CAP value or some arbitrary dealer price?
Have you checked this?
https://www.capconnect.co.uk/ConsumerValues/Ford.aspx
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I tried 4 different dealers across 2 brands all came out similar figures.
Interestingly just run an up to date finance request and it stands at £16,608, using your link and taking the middle of the best offers comes out at £14,775, so just under the £2k :cry:
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Well if CAP is marking it down, then that is a fair chance that at least the dealer is being reasonably straight with you.
I'd guess that the GFV figure was simply one based on people actually wanting a low emissions oil burner back then - and people definitely did. The GTD sold well because it was a lot of car for the money, a reasonably respected marque with good residuals and low running costs.
With both negative press about VW diesels and the government overhauling taxes because of "evil derv nox" its definitely less attractive than it was.
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If you're keeping the car to the end of the PCP, it makes no sense other than to give it back and walk away owning nowt. Then you're in a great position to get a broker deal without the P/X issue getting in the way, or even look for a different marque without the "positive equity p/x" hook that keeps you going back to the VW garage. I expect early R owners are going to be the biggest hit by this - they had GFVs of £18500 at 3 years, and since leasegate, that dropped 3 grand, so they'll be handing them back with presumably no equity and the dealer will be making very little on them if they command a sticker price of £20-21k on the used lot.
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The only one loosing out on the over the top GFV value is VWFS.
Whoever they out them to won't be paying that much for the car next - either a dealer or at auction.
They've stitched themselves.... but probably they haven't "lost" just their margins are down which in turn was probably internally funded by some marketing budget.
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Like someone has said its swings and roundabouts and works out the same.
In its very simplest form without interest say you bought a car at £20k
After 3 years its GFV was £12k so you would pay the difference of £8k over the 3 years which would be £222 a month
But someone else took the same car out and was given a GFV of £10k so that left a difference of £10k over 3 years which would be £277 a month.
In an ideal world the person paying more per month would roughly get the difference paid between the higher amount and lower amount as equity on the new car so they have both paid the same over the 3 years.
To the OP that must be really annoying that the GFV was high as you could have put some money aside for a deposit on your next car.
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You used to be able to rely on £1500 equity in a VW PCP at the end of term, but that seems to have evaporated since dieselgate. Decent residuals are a big factor for me in choosing a performance VW (as well as them being good cars) - if they start to depreciate like BMWs do now, i'll be expecting BMW sized discounts (24% off RRP) in future.
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Oooooh I see, the the GFV is less than the actual second hand price the garage will pay for it then you get the difference?
eg the GFV is £14k and the dealer's trade in offer is £15k then you get £1k in your pocket?
Do you have to actually fully purchase the car to own the difference or do they just transact that for you? I suppose technical VWFS own the car, not you or the dealership.
Sorry, I was interested to understand this as I'm probably being forced out of my company car scheme early 2017! Its been decades since I've owned a car!
Yup, I could just buy the car if I wanted and then sell it on and pocket the difference. If a dealer takes it in against a new PCP, they then clear the finance and any difference between the GFV and what they give you, goes to the deposit on the new PCP.
As I got a very healthy discount when I got this GTD, this should all be helping me, but for some reason it is all upside down. If someone had a car at a similar age and deal as mine at say £14K GFV, whereas mine is £16K, then I would be able to start asking questions. My suspicion is still that there was some error, either human or computer which meant the wrong GFV was put on mine, otherwise it just doesnt make sense. Ofcourse, as I signed upfront to it all, I have pretty much no leg to stand on at the time.
A discount won't affect what happens at the end of a PCP - it will lower the monthly repayments, just like the amount of deposit makes no difference at the end - again it just lowers the payments. The only way a mistake could have been made is if the vehicle is incorrect on your finance documents or if your mileage is incorrect on the documents. If both these are correct then the end figure is also correct so just hand the car back if it isn't worth what is outstanding - that is what PCP is for anyway. The PCP has saved you the additional depreciation and the finance company takes the risk and the hit.
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I know there are no guarantees that there will be equity at the end of a PCP, but in my experience dealers do sell them (or did) on the basis that there will be always be equity left over that can be used as a deposit on your next new car.
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My post seems to have been lost at the end of page 1, so I am repeating the saliant points.
I traded my GTD last January and broke even on my PCP, after about 2 years (GFV £13,225, settlement £15,319). Given my figures, above, I can see your point. Seeing that your deal was done around the same time as mine (March 2014), it is difficult to imagine why the 2 GFVs should be over £2K different! Hope you manage to negotiate a deal.
So can anyone else, who started a PCP on a GTD around that time, show any figures, so that we can establish a norm?
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Sounds like the rubbish I got with my endowment mortgage Trev... "paid off and cash to have expensive holidays too"... If only :-(
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Cap seem to be valuing my Gti @14800 my settlement ATM is 17200 2.5 years into a 4 year deal. Doubt I'm going to end up with any equity.
Are all these cheap R's causing the fall.
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Unfortunately having any equity at all in early GTI, GTD and R PCP's is highly unlikely. VW finance were hoping for similar GFV's to the much more limited MK6 cars but then they let every man and his dog get one for peanuts on contract hire and it has destroyed the 2nd hand market.
Back in 2013/2014 you could have a GTD on PCP for less than a GT or in some cases a match spec car because the GFV was so ridiculously high. Like someone has said earlier the only person loosing with you having a high GFV is VW finance. You have benefited from a unusually low payment for a car that has lost more than you have paid out for.
Setting your mileage on 5000 miles per year would of also paid a big part in the GFV back then but it doesn't make that much of a difference now.
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Thanks Guys or all the responses. Looks like loads of us at the time were put in the same boat.
I had a call back from VWFS today who basically said "tough" but in a very nice way :) . Agree with several others here, it is simply very poor Future Values being applies to the car at the start of the PCP.
What was interesting was that VWFS told me that the dealer can manipulate the GFV when the contract is being setup.. I dispute this and was always under the impression this was set by the term and mileage on the agreement.
I am going to head back to the dealers tomorrow if I get time and ask to sit down with a senior manager who can hopefully explain how I have been put in this position, along with what they can do to fix it. Definitely think leasing is the way to go from now on.
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You have been put in that position because at the time VW finance were offering very high GFV's the only way the retailer can increase the GFV s by shortening the term or as you did set the mileage lower.
We will never see GFV's like those ever again because Volkswagen finance or loosing thousands on every one that was signed up back then. It's actually a very good thing you had such a high GFV because if it was a lot lower you would of paid out more per month for the same car and still had nothing to show for it.
A lot of PCP customer are moving to contract hire now......
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Yup its not so much the cheap deals now but how the market has gone. Historical data is what is used to judge the GMFV. When MK6 was around VW had the 170ps engine which had 139co2. Whilst this was a great car the company car tax brigade didn't like it as much as other cars and preferred to take the Golf GT or BMW 120D. As a result it didn't sell in huge numbers (most cars registered are fleet cars) and therefore commanded very high resale values. Likewise MK6 Golf R was on its own production line with limited allocation meaning production was less than demand reducing discounts and protecting resale. GTI was also fairly rare due to it's separate allocation and the model turning into edition 35 mid cycle which only lasted a few years - there was plenty of MK5 GTI around at the time but these were still commanding a premium on the used market due to a cycle of price increases that saw the price of GTI go from £19995 on launch in 2005 to £27000 for the Edition 35 in 2011. VW also kept standard GTI fresh as it increased the price by putting leather into it late cycle.
When predicting GMFV's on MK7 they used the data from this period to work out the % of residual value the MK7 was likely to have. They do this using CAP future and by monitoring the used car market. What has actually happened is limited price increases - perhaps even price decreases when taking into account tactical deposit allowance. Increased production to keep up with the demand for the fleet market who suddenly liked the 184ps diesel with 109co2. All performance golf now part of standard Golf allocation meaning dealers could order as many as they liked and therefore competing on price pushing down the cost of new cars. Also spec increases have kept the car up to date but not added the sort of value that adding in £2000 of leather late cycle tends to do for this kind of product.
So what we see is now the residuals quoted today are lower, in fact the increased deposit contributions on offer now are there to negate the impact of the lower residual for those wanting to change their GTI/GTD/R for another one - essentially they prop up the lower residual value due to the way the market has performed.
Ultimately whilst its hard to predict the future I suspect the next set of Golf's will start to rise in price again. We are coming out of a market where the pound was strong and the market was growing strongly each year. Now the pound is weak and the market if anything is starting to contract volumes are likely to reduce and prices can only go one way. MK7.5 certainly won't be any cheaper and will only be made for 2 years tops, and when MK8 comes out the price will go up as it will be the most modern luxury hatch in the market place. VW didn't hike the Golf's price in November along with all the other cars so the product is overdue its inflationary increase.
Oh and a dealer can manipulate the future value - but only downwards. Why would you want a guarantee at a lower figure? No dealer in their right mind would recommend that as the only person who can lose is the customer. It's worth remembering a GMFV is only high in retrospect, nobody ever complains when there is equity at the end but I've heard plenty complain if they think it's not high enough at the outset and the monthly payment ends up being more than BMW, Mercedes etc etc.
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I haven't seen much manipulation in GFVs for VWs, they seem to be pretty much set at certain duration/mileage combinations.
Have you ever been through negotiations with an Audi Garage though? When buying the missus' A1, went in knowing full well what the Audi website's finance example was for her model/trim/engine of A1, and therefore what the GFV was. Given that I was adding £1500 of optional equipment, I expected to at least match the website quoted GFV.
I was surprised to see that he'd knocked £1400 off that figure to bump up the monthlies, when I asked why, he said it was down to the discount I had negotiated (9% is about all you can expect from an A1). They give with one hand and take it all back with the other to keep the monthlies the same. I asked whether this would mean that I would get offered lower p/x value if I had a lower GFV on the exact same car as someone else, and he implied that I would, without actually saying it. Is it me or do most Audi salespeople have that slimy estate agent vibe about them? When enquiring aabout an S3 in the past and then this A1, I was made to feel like it was a privilege to have an appointment with them.
I took their finance to get the £500 deposit contribution and settled under the cooling off period the next day, so I had the last laugh. :grin:
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Sadly I saw all this coming six months ago and baled out of my GTD (which was also a March 2014 car) by selling privately and went over to leasing on a no deposit basis. Now I have no money tied up in the car , paid no deposit and know exactly how long I will keep it for.
I think PCP will die off as the preferred option for private purchases over the next few years as people see the reality that the companies promises of equity at end of term are just not materialising. Its much better to know that you have to hand the car back at the end of the term and just accept it which is the case with leasing.
I lost a lot of money on that GTD purchase - never again!
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Is it really any worse than it used to be?
I'd gotten used to paying out £400 a month on PCP (after getting that "positive equity" at p/x and a decent discount) for 2 Sciroccos and 2 MK5 Golfs before I had the means to buy outright, and people are paying that now on a bare bones MK7 GTI if they don't get any discount (finance example over 48 months is £6055 deposit + £265 PM ~ £391pm term average inclusive of deposit). The sticker price is higher, but the incentives and discounts are bigger and finance APR % is lower.
Maybe there are some here that have bought a Golf for the first time and thought that £300pm average for a standard spec performance Golf is the norm. As always, going in heavy on options is always going to cost you a lot on your monthlies, but that has always been the case.
I could see myself leasing next time rather than tying up £28k of my own money and putting away £300 a month to cover depreciation.
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Surely Personal Contract Hire is better than PCP ? ... and cheaper !
Mine's just about to finish, and looking to do another on a new GTD.
Not all declarers do them though - WhatCar Leasing seems to be the best site, (unless someone else knows a better one ..) and the PCH is done through the dealer and VWFS. Dealers seem keen to match monthly prices.
Mistake I made last time was to do a 10000 mpa contract, but I won't do that many miles. Should have done an 8000 mpa contract, and paid a small extra fee at the end. There's no refund for doing fewer miles !
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Looking back at my paperwork I got 13k for a 5yo mk6 in 2014 against the mk7.
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Looking back at my paperwork I got 13k for a 5yo mk6 in 2014 against the mk7.
I got £18k for a 2.5 year old Scirocco 170TDI against my new GTD in Sept 13, but the level of discount was quite poor for a car ordered unseen at Easter 2013 (and no finance incentives) - swings and roundabouts, good p/x and sh!te discount or vice-versa.
I got £18k for my 20 month old GTD against my R in May 2015, again, no finance incentives at the time (except for the GTI), but I did get a 12% saving on the R's RRP also, so that GTD lost me about £7k, not too bad. If i'd bought the R 6 months later, i'd have had a finance contribution and £4k less for my GTD.