Ford options scheme

futura

Hi wonder if anyone can help me I have been told on the ford options scheme if you choose a car that after 12 months of leasing it, the valuation may well be worth a lot more than what was originally agreed at the start of the contract so with the increase they actually owe you money. too good to be true???

Cheer's

Paul.

forgotmyname

Unlikely, The car loses most of its value the moment it gets registered.

Now its a used car and worth thousands less.

When buying a car on normal finance, Its usually worth less than what you owe for 3 years. After the 3rd year depending on the car and condition it will start to be worth more than you owe.

motorguy

futura wrote: »

Hi wonder if anyone can help me I have been told on the ford options scheme if you choose a car that after 12 months of leasing it, the valuation may well be worth a lot more than what was originally agreed at the start of the contract so with the increase they actually owe you money. too good to be true???

Cheer's

Paul.

The idea would be that the 'guaranteed future value' would be set at the start of the agreement and come trade in time, you'd hope the car is worth more than that value - which is quite common as they're set low in the first place.

motorguy

forgotmyname wrote: »

Unlikely, The car loses most of its value the moment it gets registered.

Now its a used car and worth thousands less.

When buying a car on normal finance, Its usually worth less than what you owe for 3 years. After the 3rd year depending on the car and condition it will start to be worth more than you owe.

Thats two threads in one day where you've commented on PCP's and given misleading information.

https://forums.moneysavingexpert.com/discussion/4108847

With all due respect, if you dont understand the mechanics of PCP deals and their benefits, you'd be best not to comment, rather than confuse people.

forgotmyname

My other thread isnt wrong, I think you read it wrong.

Other thread. "They sell the car" For some reason you corrected this to the finance company sell the car not the dealer. I didnt say the dealer???

I didnt say the agreed value was worth £10,000 i meant the cars value to the manufacturer. And these were just random figures not an exact figure for a particular car. The cars worth £10,000 to them Anything less and they lose. But you pay that in rental (hopefully).

I put at the end it doesnt suit everyone.. ie. ME.
I didnt tell them it doesnt suit them.

We will have to wait and see what the OP does, If they do the deal they can post back that the car is worth " A LOT MORE " than the agreed value in 12 months time.

Personally i still doubt that. A lot more after 3 years if you look after it and its a desirable model, Then probably.

A nice colour diesel mercedes thats been treated to a good look at the options list or a bright pink perodua with a tiny engine but high emissions?

Wonder which one will be worth more than its agreed value?

Can you honestly say the OP's car will be worth a LOT more in 12 months time, Especially when they dont even mention what car / model. Which will make a huge difference.

kelloggs36

It is a risk you take - they give you a 'guaranteed value# at the end of the lease term, with the possibility that the car is actually worth more - that isn't more than the original price of the car, just that it will have devalued less than they thought. It really depends on the market out there - I wouldn't bank on it working out much in your favour, but at least you have a guaranteed figure (provided you haven't trashed the car lol).

motorguy

forgotmyname wrote: »

My other thread isnt wrong, I think you read it wrong.

Other thread. "They sell the car" For some reason you corrected this to the finance company sell the car not the dealer. I didnt say the dealer???

I corrected the implication - which was that the dealer was going to net a £6K profit at the end of a PCP deal. Thats not the case.

forgotmyname wrote: »

We will have to wait and see what the OP does, If they do the deal they can post back that the car is worth " A LOT MORE " than the agreed value in 12 months time.

Personally i still doubt that. A lot more after 3 years if you look after it and its a desirable model, Then probably.

A nice colour diesel mercedes thats been treated to a good look at the options list or a bright pink perodua with a tiny engine but high emissions?

Wonder which one will be worth more than its agreed value?

Can you honestly say the OP's car will be worth a LOT more in 12 months time, Especially when they dont even mention what car / model. Which will make a huge difference.

Irrespective of whether its a pink merc with blue spots, or kia perodua the finance company - usually a manufacturer owned one if its a new car - will value it based on spec and colour combo and price it for their 'worst case scenario' which is them having to take the car back. It will be set deliberately low so that there is least risk to themselves. Odds are therefore that the car will be worth MORE than that at the end of the period - whether that be a 12 month period or a more typical 2 or 3 year one.

They clearly will value a poor spec'd car in a bad colour at a lot less than a nicely spec'd one in a good colour.

A good example of that is my wifes z4. It came on 18's as a Sport model, with 19 inch alloys being a £500 upgrade. On the PCP deal once the dealer plugged in the 19 inch alloy wheel upgrade the residual value increased by £500, effectively meaning my wife got the wheels upgrade for 'free' as it didnt add to her deposit or to her monthly payments.

motorguy

kelloggs36 wrote: »

It is a risk you take - they give you a 'guaranteed value# at the end of the lease term, with the possibility that the car is actually worth more - that isn't more than the original price of the car, just that it will have devalued less than they thought. It really depends on the market out there - I wouldn't bank on it working out much in your favour, but at least you have a guaranteed figure (provided you haven't trashed the car lol).

Its not a risk at all. If you put down a deposit and agree to the residual then your commitment is simply to make the payments and keep the car in good order.

If the cars worth less than the residual, you hand it back, so no risk and its the finance company's problem.

If the cars worth only what the residual is, then you hand it back and are free to negotiate the best price on your next car, free from having a trade in. Very handy if you're moving between brands as say, a BMW dealer probably wouldnt want a Subaru, etc, etc.

If its worth more than the residual price then you're quids in, and the extra money is yours.

PCP deals now typically have a lower residual value than they may previously have done, so its a lot more typical - in fact very usual - for the car to be worth more than the GFV. BMW Finance fell foul to their own success a couple of years ago when the recession started to bite. Their cars ended up being worth much less than the residuals they had set, so people just handed them back in their droves. From memory it cost BMW hundreds of millions to sort out. They've corrected that by dropping their GFV's on new finance deals.

My wifes last BMW cost something like £30K and had a GFV value of £18K. When it came to the end of the agreement it was worth maybe £15K so she handed it back.

Her latest BMW cost around £30K too, however this time BMW have set the GFV to £14K, thus protecting themselves BUT making it much easier to have equity in the car come trade in time.