guaranteed future value car buying schemes, help!

ianbar0

i am struggling to describe this properly so i appologise in advance! i am looking to buy a new car next year. i look at these ways of buying a car with the guaranteed future value(they all have different names, think ford is options for example)

an emple would be.... mini one £13k
deposit 2900
credit 10140
first payment 329
34 monthly payments 179
optional final payment 6081

my main question is when you get to the end, i understand i pay the final payment and keep the car, however if i want to give the car back and get another, where is my deposit? is it the value of the car? im very confused. i hear this really is the best way to buy but guess im old fashioned and dont understand these things!

Premier_2

The deposit on your next car could be the difference, if any, between the actual price the dealer is prepared to buy the car back from you at less the £6081 you still owe.

No guarantees there will be any difference, and even if there is, that it will be sufficient to cover the deposit on the next car ... but the dealer will try their best if it means another sale (e.g. perhaps offering a no/v.low deposit scheme next time).

I'm not sure who suggested this was the best way to buy (probably a salesman) but is paying over £15k for a car only guaranteed to be worth just over £6k in 3 years a good buy?

ianbar0

hmm thank you, that is what i thought. really silly question though, would i have to make the final payment to trade it in? it does not say this but without the final payment i woyld be paying just under £10k in total, if no final payment was require this sounds more apealing.

Premier_2

At the end of the contract, you can either give the car back and pay nothing i.e. you spent almost £10k, (plus servicing costs, tax, insurance etc.) for effectively 3 years car hire, or pay the £6081 and keep the car.

... or as I mentioned try and flog it back to the dealer for more than £6081.

PasturesNew

If it were me, I'd rather take my chances by paying cash £2900 for a car and setting aside the £329 then £179/month for repairs/maintenance.

bosseyed

If its anything like my deal, you're gambling somewhat on how much the car will be worth once the initial finance deal is up. I'm on a 3 year deal, which leaves me with a final payment of £6k - the options then being:

a) Hand the car back to the dealer and walk away
b) Re-finance on a new deal and continue to pay off the outstanding 6k
c) Assuming the car is worth more than 6k (which it should be), then sell it back to the dealer and the difference becomes my deposit on something new from them.

We'll see how that works in a couple of years....

bclark

PasturesNew wrote: »

If it were me, I'd rather take my chances by paying cash £2900 for a car and setting aside the £329 then £179/month for repairs/maintenance.

That’s you though. Some people quite like to drive a modern and up to date Car. I for one am more than happy to pay a premium for that but always do my best to get the best deal I can on what I want.

iolanthe07

If you do go for it be very careful you do not exceed the agreed number of miles. There was a poster on here a while back who hadn't read the small print, or thought that it didn't apply to her for some reason, and became very indignant with Peugeot when they invoked the mileage penalty at the end of the contract. She wanted to organise some sort of petition, but she didn't get much sympathy here, tbh.

motorguy

bclark wrote: »

That’s you though. Some people quite like to drive a modern and up to date Car. I for one am more than happy to pay a premium for that but always do my best to get the best deal I can on what I want.

+1

I did exactly what was proposed there - bought a car at £2900, and i ended up on average spending a couple of hundred a month on maintenance. Sold it and bought another and same thing happened.

Plus the car was off the road at least once a month to get something sorted out.

I've put down £2500 now against a new Passat Bluemotion and will be paying back £269 a month. I dont think i'm going to be any worse off when you take into account the maintenance i was spending and the extra fuel savings i'l get with a 60mpg Passat, plus i've a brand new worry free car at my door.

emmell

My son's friend bought a renault clio (his first car) on this type of scheme with £4000 balloon payment at the end, when he went back to the dealer they offered him £4000 so no deposit for his next car. Because he had no deposit he couldn't do another deal on a new car as he had no cash left once the finance was paid off. It's alright saying "guaranteed future value" but there was no equity left in the car.
He has now learnt his lesson.
ML.

ukjoel

Not necessarily best way to buy but probably the most popular way in the UK.

What they are doing is using the cars value in 3 years to reduce your monthly payments.

This is because too many in this country are obsessed by lowest monthly payment rather than total cost.

If you wish to change your car every 3 years and want a low fixed monthly payment then it can be a good way of doing things.

The number of people that make the final payment and buy their car at the end of the three years is very low. Dealers will generally call you between 24 and 36 months and sell you a new car for the same monthly rental.

Mini is probably one of the better schemes for this type of finance and residual values are better than average.

Dont try doing it with a Kia Sorento or a Landrover Freelander.