A boring series PCP questions, sorry.....
Discussion
Hi Guys,
So, with PCP, is the GFV set in stone? By that I mean could the GFV either drop benefitting the purchaser or rise beneffitting the dealer? You take a PCP out based on the annual mileage. But say for instance your mileage, at the end of the term is a lot lower than the original contract states. Does that not affect the value of the car? Or are you stuck with that GFV regardless?
Also what actually happens at the end of the term? I understand, that basically you hand the car back or pay the GFV. I get that. But does that mean the purchaser has no negotiating power at all, it's hand it back, or pay up? I'd imagine that a dealership would want to keep a customer onboard with another PCP, so there would be a conversation, right? I'm having trouble thinking anything other that the customer has to start from scratch again. He has no car to cover a deposit say, but then he needs a deposite for a new PCP to be taken out.
I've never purchased on PCP, until my current car. The lower monthlies got me tbh for a 35k car that I would never have been able to afford. And my history shows that I change my car every 3 years, so the PCP was perfect, apparently for me. And by the way this was for a 'slightly used' car with 4k miles on the clock from a main dealer, and with all new car benefits, warranty (albeit 12 mths and not 3 years).
I probably know the answer to most of this, but I am just curious as to what other thoughts are out there.
So, with PCP, is the GFV set in stone? By that I mean could the GFV either drop benefitting the purchaser or rise beneffitting the dealer? You take a PCP out based on the annual mileage. But say for instance your mileage, at the end of the term is a lot lower than the original contract states. Does that not affect the value of the car? Or are you stuck with that GFV regardless?
Also what actually happens at the end of the term? I understand, that basically you hand the car back or pay the GFV. I get that. But does that mean the purchaser has no negotiating power at all, it's hand it back, or pay up? I'd imagine that a dealership would want to keep a customer onboard with another PCP, so there would be a conversation, right? I'm having trouble thinking anything other that the customer has to start from scratch again. He has no car to cover a deposit say, but then he needs a deposite for a new PCP to be taken out.
I've never purchased on PCP, until my current car. The lower monthlies got me tbh for a 35k car that I would never have been able to afford. And my history shows that I change my car every 3 years, so the PCP was perfect, apparently for me. And by the way this was for a 'slightly used' car with 4k miles on the clock from a main dealer, and with all new car benefits, warranty (albeit 12 mths and not 3 years).
I probably know the answer to most of this, but I am just curious as to what other thoughts are out there.
I guess, because people got confused with it having "Value" in its name, GFV generally isn't used now - it's more usually Optional Final Payment.
If you want to keep the car, it seems to be absolutely non-negotiable, although there were suggestions after the 2008 crash that BMW discounted the figures to encourage people to keep cars. It's the only time I've ever heard of it.
Of course, if you're p/xing into a new car, then the dealer may have scope to mess around with the value as part of the deal. There may be loyalty bonuses the dealer can use to keep your business or conquest bonuses to take business from a different manufacturer. You may or may not be aware of these when doing the deal.
If you want to keep the car, it seems to be absolutely non-negotiable, although there were suggestions after the 2008 crash that BMW discounted the figures to encourage people to keep cars. It's the only time I've ever heard of it.
Of course, if you're p/xing into a new car, then the dealer may have scope to mess around with the value as part of the deal. There may be loyalty bonuses the dealer can use to keep your business or conquest bonuses to take business from a different manufacturer. You may or may not be aware of these when doing the deal.
It is a quite a simple figure to understand if you consider it just gives you the choice to buy it or not.
If the GFV is £15k and all the similar cars in the market are £13k at the end of 3 years you walk away and hand back the keys.
If the GFV is £15k and all similar cars are £17k at the end of 3 years you would want to buy it for the GFV (£15k) as your car would effectively be cheap.
The estimated mileage is to allow the dealer to give a GFV. If you exceed it you pay a penalty for doing so if you want to give it back. If you want to keep it the mileage is irrelevant.
At the end of the agreement you can trade it in elsewhere or sell privately and pay off the finance outstanding and are not constrained to go back to the original dealer, which many people get confused about.
If the GFV is £15k and all the similar cars in the market are £13k at the end of 3 years you walk away and hand back the keys.
If the GFV is £15k and all similar cars are £17k at the end of 3 years you would want to buy it for the GFV (£15k) as your car would effectively be cheap.
The estimated mileage is to allow the dealer to give a GFV. If you exceed it you pay a penalty for doing so if you want to give it back. If you want to keep it the mileage is irrelevant.
At the end of the agreement you can trade it in elsewhere or sell privately and pay off the finance outstanding and are not constrained to go back to the original dealer, which many people get confused about.
Sheepshanks said:
I guess, because people got confused with it having "Value" in its name, GFV generally isn't used now - it's more usually Optional Final Payment.
If you want to keep the car, it seems to be absolutely non-negotiable, although there were suggestions after the 2008 crash that BMW discounted the figures to encourage people to keep cars. It's the only time I've ever heard of it.
Of course, if you're p/xing into a new car, then the dealer may have scope to mess around with the value as part of the deal. There may be loyalty bonuses the dealer can use to keep your business or conquest bonuses to take business from a different manufacturer. You may or may not be aware of these when doing the deal.
I'm pretty sure my PCP says GFV and it does happen to be BMW. But I get you. I think PCP was a masterstroke by the dealers to be honest.If you want to keep the car, it seems to be absolutely non-negotiable, although there were suggestions after the 2008 crash that BMW discounted the figures to encourage people to keep cars. It's the only time I've ever heard of it.
Of course, if you're p/xing into a new car, then the dealer may have scope to mess around with the value as part of the deal. There may be loyalty bonuses the dealer can use to keep your business or conquest bonuses to take business from a different manufacturer. You may or may not be aware of these when doing the deal.
jjr1 said:
It is a quite a simple figure to understand if you consider it just gives you the choice to buy it or not.
If the GFV is £15k and all the similar cars in the market are £13k at the end of 3 years you walk away and hand back the keys.
If the GFV is £15k and all similar cars are £17k at the end of 3 years you would want to buy it for the GFV (£15k) as your car would effectively be cheap.
The estimated mileage is to allow the dealer to give a GFV. If you exceed it you pay a penalty for doing so if you want to give it back. If you want to keep it the mileage is irrelevant.
At the end of the agreement you can trade it in elsewhere or sell privately and pay off the finance outstanding and are not constrained to go back to the original dealer, which many people get confused about.
Yeah sure I get most of this. Regarding mileage I guess if the mileage is a lot lower than the estimated at the start of the PCP, then the car could be potentially worth more than the GFV, so it's quids in if say for instance I want to keep the car.If the GFV is £15k and all the similar cars in the market are £13k at the end of 3 years you walk away and hand back the keys.
If the GFV is £15k and all similar cars are £17k at the end of 3 years you would want to buy it for the GFV (£15k) as your car would effectively be cheap.
The estimated mileage is to allow the dealer to give a GFV. If you exceed it you pay a penalty for doing so if you want to give it back. If you want to keep it the mileage is irrelevant.
At the end of the agreement you can trade it in elsewhere or sell privately and pay off the finance outstanding and are not constrained to go back to the original dealer, which many people get confused about.
And yes, of course we can go to different dealers at the end of the contract, the PCP gets paid off wherever the car is put in.
RSsteveH said:
I'm pretty sure my PCP says GFV and it does happen to be BMW. But I get you. I think PCP was a masterstroke by the dealers to be honest.
I just had a quick look at the BMW website and it does talk about GFV in the description of PCP but in the examples it gives it has Optional Final Payment.I know it's caused upset on a Mercedes forum I use where people are very miffed that they want to keep their car and can't understand why they're being asked to pay more for it than it's worth. If the car is worth £16K and the GFV is £18K then the one thing GFV hasn't done is guarantee the final value!
RSsteveH said:
Hi Guys,
So, with PCP, is the GFV set in stone? By that I mean could the GFV either drop benefitting the purchaser or rise beneffitting the dealer? You take a PCP out based on the annual mileage. But say for instance your mileage, at the end of the term is a lot lower than the original contract states. Does that not affect the value of the car? Or are you stuck with that GFV regardless?
The GFV is set in stone, yes. That is what you owe at the end of the term based on the agreed mileage. If you agree 10k per annum and do 2k per annum, then the trade value of the car is higher (8k miles vs 40k miles)So, with PCP, is the GFV set in stone? By that I mean could the GFV either drop benefitting the purchaser or rise beneffitting the dealer? You take a PCP out based on the annual mileage. But say for instance your mileage, at the end of the term is a lot lower than the original contract states. Does that not affect the value of the car? Or are you stuck with that GFV regardless?
RSsteveH said:
Also what actually happens at the end of the term? I understand, that basically you hand the car back or pay the GFV. I get that. But does that mean the purchaser has no negotiating power at all, it's hand it back, or pay up? I'd imagine that a dealership would want to keep a customer onboard with another PCP, so there would be a conversation, right? I'm having trouble thinking anything other that the customer has to start from scratch again. He has no car to cover a deposit say, but then he needs a deposite for a new PCP to be taken out.
3 options at the end of the term1. Pay the GFV and keep the car. Only if the GFV is less that trade value
2. Hand the car back to the finance company. Only if the GFV is higher than the trade value
3. PX for new car. This is where your negotiating power is, again depending on GFV vs trade value
Any large deposit put in at the start is likely lost come GFV time, although you'll have benefited over the term by paying less per month and less interest overall.
RSsteveH said:
I've never purchased on PCP, until my current car. The lower monthlies got me tbh for a 35k car that I would never have been able to afford. And my history shows that I change my car every 3 years, so the PCP was perfect, apparently for me. And by the way this was for a 'slightly used' car with 4k miles on the clock from a main dealer, and with all new car benefits, warranty (albeit 12 mths and not 3 years).
I probably know the answer to most of this, but I am just curious as to what other thoughts are out there.
And there is the beauty of PCP. It's a train that you're continually on board, every 3/4 years changing to a new car. The main benefit to you is the protection against negative equity, but to benefit you need to keep the car full termI probably know the answer to most of this, but I am just curious as to what other thoughts are out there.
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