Guaranteed Future Value - PCP - GTD May 2017 - what is yours please.

[karlak]

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.

[dubber36]

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.

[karlak]

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.

[phope]

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

[fredgroves]

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?

[karlak]

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.

[fredgroves]

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!

[karlak]

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.

[fredgroves]

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)

[Talk-torque]

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.