Which is better? Higher or lower GFV?

owitemisermusa

Hi guys, a quick question.

Which is indeed better, a higher or lower GFV (guaranteed future value/balloon payment/residual value) in a PCP deal?

Seen a few deals, one with lower APR but higher monthly amount due to lower GFV (balloon payment) and one with a higher APR, lower monthly payment and higher GFV.

A little confused, it seemed pretty clear cut a short time ago.

Many thanks!

owitemisermusa

Bumpity bump!

Hintza

You will need to get a spread sheet out and calculate your total payments over the period of the deal. You can then see which one is offering the better value.

bigjl

It would depend on wether you are going to keep or resell, however the lump sum at the end is really only a carrot to make you think you can actually afford the car.

I had a car years ago on such a deal, wouldn't do so again, they are just trying to keep you hooked on paying them interest.

owitemisermusa

Thanks guys.

Will be looking at cost over the term to compare. Geez, these finance people and their tricks! The finance houses OWE us as a nation, LOL!

owitemisermusa

Danke!! Sorted now. Got a low GFV and a low rate.
Danke again (dunno what that is in German).

Inactive

owitemisermusa wrote: »

Thanks guys.

Will be looking at cost over the term to compare. Geez, these finance people and their tricks! The finance houses OWE us as a nation, LOL!

No, you always owe them.;):)

chieffy72

If you buy a £10,000 car with a GFV of £6,000 you pay £4,000 (plus interest) over the term.
If you buy a £10,000 car with a GFV of £5,000 you pay £5,000 (plus interest) over the term.

If the car ends up being worth £6500 at the end of the term you'll have equity of £500 or £1500 depending which option you went for,I personally would go for the higher payments and the higher GFV which will be tied to a mileage band,usually better to be safe than sorry and don't go for a 6,000 mile per year band when you know you're going to do 12,000.