[robwils]

Anyone know how they work out the GFV, I know they use mileage, but they appear lower than say the data on what car site.

Are they designed to leave you with some / no equity in the car.
what are peoples experiences of vlaue quoted vs GFV assuming anyone actually gets to the end of the agreement ?

[roshambo]

I imagine most people are too impatient to get to the end of their agreements lol. Both mine were 48 months, first one I reached month 44 and second I reached month 22. PCP's provide flexibility but they know that a lot of people get tempted out of them before end of term. I've had annual phone calls from dealership asking how I'm getting along with the car, or if I'm looking to change - PCP is designed for repeat business.

GFV is there to safeguard BMWFS in all eventuallities. If you buy the car at end of term, then they've made good money on interest. If you hand back the car or part ex, the dealer can turn a profit on AUC or auction most likely - but in any case BMWFS have again made a killing on interest and you've paid a bit more off the value of the car.

[mactrack]

Originally Posted by roshambo

GFV is there to safeguard BMWFS in all eventuallities.

Even when, for example at the height of the credit crunch, previously set GFVs were much higher than market values and cars were being handed back?

[E60MKF]

Originally Posted by mactrack

Even when, for example at the height of the credit crunch, previously set GFVs were much higher than market values and cars were being handed back?

This happened to me with my E60, I bought the car in 2007 when times were good and come 2010 when most cars (after 3 years) would be in a positive equity, I was hit with a right ol'nasty negative equity. On top of that the F10 had been released so there was no support from anyone as the demand was far too great.

I ended up changing from PCP to HP (all with BMWFS) to build up equity a bit quicker and then changed the car in 2013 with £3/4k equity.

[moonshine]

The Final payment part of the PCP deal is likely to be a low figure, I.e you are likely to have a little bit of equity in the car at the final payment point.

That way you can have a little bit of cash available to put in as a deposit on another car.

If the actual value of the car is less than the Final payment then no one would buy the car at the end of the day and BMW would be left with a lot of used cars to offload at a loss.

I believe the GFV has historically been over inflated of make deals look better up front as this results in smaller monthly payments but this left lots of buyers with no equity at the end an handing back cars to finance houses as they were worth less than what was owed on them.

Underestimating the GFV leads to higher monthly payments but increases the likelihood of positive equity at the end.

[....,,,,..,,..]

Originally Posted by moonshine

The Final payment part of the PCP deal is likely to be a low figure, I.e you are likely to have a little bit of equity in the car at the final payment point.

That way you can have a little bit of cash available to put in as a deposit on another car.

If the actual value of the car is less than the Final payment then no one would buy the car at the end of the day and BMW would be left with a lot of used cars to offload at a loss.

I believe the GFV has historically been over inflated of make deals look better up front as this results in smaller monthly payments but this left lots of buyers with no equity at the end an handing back cars to finance houses as they were worth less than what was owed on them.

Underestimating the GFV leads to higher monthly payments but increases the likelihood of positive equity at the end.

I believe a lot of people are going to be sitting with say 16k GFV and a car with dealer value of 14k.

It is very much get a case of get an quote at mid point or so, just to see if yo gain anything keeping it for rest of term.

Mine was sitting a shade under 3k negative after 6 months, however that's due to a mix of interest, low deposit and low monthlies.

That should level a bit over next 12 months.

[robwils]

Basically I'm comparing quotes to see what different cars will cost over the three year period assuming car will only be worth the gfv, so cost will be my deposit (say 10k) and all the monthlies.

I guess that's what's guaranteed as a max cost ?

I can then compare that with what my current car has cost buying it with large deposit and bank loan.

[mgarvey]

I've done several PCP deals over the years, and here are my general thoughts and experiences:

1) What GFV you get and whether you'll have equity depends on all sorts of factors that can be hard to predict; global economy, LCI/model changes, dealer campaigns/oversupply, taxation changes, time of year etc

2) Most of my PCP's have ended up with between £500-£1000 equity, based on a changeover within the last 6 months of the contract period (obviously keeping the car right to term normally helps). One of my deals, on a Mini, got more like £1500 equity, and two (a Golf GTI and my current F30) have resulted in negative equity and a 'hand it back' situation either by Voluntary Termination or end of term.

3) It may be just my perception, but it feels to me that the initial deposit needed on a PCP is growing, and faster than inflation. I'm sure my early PCP's 10 years or so ago only needed a deposit of £1000-£1500 or so for a £25k car, now a similar deal seems to need £5000 or more down at the start.

4) I also get the feeling that people are catching onto Personal Contract Hire (leasing), which tends to offer a lower deposit and payments, but not the option to purchase at the end, or at least not so easily. Again my view is that this popularity relates to the growing deposits and shrinking equity in PCP deals, plus easier access provided by finance houses to personal leasing deals.

[Proftinkerpot]

Leasing appears to restrict your options more than PCP. It's more difficult to get out early and you can't choose to own the car at the end. Horses for courses and you decide what suits you best.

[335i nthehouse]

Originally Posted by moonshine

The Final payment part of the PCP deal is likely to be a low figure, I.e you are likely to have a little bit of equity in the car at the final payment point.

That way you can have a little bit of cash available to put in as a deposit on another car.

If the actual value of the car is less than the Final payment then no one would buy the car at the end of the day and BMW would be left with a lot of used cars to offload at a loss.

I believe the GFV has historically been over inflated of make deals look better up front as this results in smaller monthly payments but this left lots of buyers with no equity at the end an handing back cars to finance houses as they were worth less than what was owed on them.

Underestimating the GFV leads to higher monthly payments but increases the likelihood of positive equity at the end.

More importantly

Dealers aim to set PCP lower as it protects them. If the GFV is below market value, if you hand car back they are protected, GFV higher than market value means they stand the shortfall as you have only paid off capital up to that point. A bit if float protects agains used car market fluctuations

My understanding is you should always be in slight positive equity at full term and this then acts as your 'deposit' for next car and the cycle goes on.....

The earlier you come out the more it costs you of course

[JustChris]

My dealer said 22months in the current average for vehicle change on a PCP now.

[E60MKF]

My f20 isn't two years old yet (will be in June) and has already hit a positive equity!

I put in a minimal deposit and pay £230p/m, thing is the car has done about 6-7000 miles less than the allowance..

[mgarvey]

Originally Posted by E60MKF

My f20 isn't two years old yet (will be in June) and has already hit a positive equity!

I put in a minimal deposit and pay £230p/m, thing is the car has done about 6-7000 miles less than the allowance..

Amazing how much circumstances can vary. I put down £3500 on my 318d Sport and pay £420 a month for 10k a year, which at an APR of 3.9% seemed a decent deal at the time.

31 months into a 36 month deal, with 24k miles I have negative equity of £2000+

Other threads on this forum suggest my situation isn't unusual, so it seems there are very variable experiences - either that or the F20 holds its value an awful lot better!

[chetalien]

Originally Posted by mgarvey

Amazing how much circumstances can vary. I put down £3500 on my 318d Sport and pay £420 a month for 10k a year, which at an APR of 3.9% seemed a decent deal at the time.

31 months into a 36 month deal, with 24k miles I have negative equity of £2000+

Other threads on this forum suggest my situation isn't unusual, so it seems there are very variable experiences - either that or the F20 holds its value an awful lot better!

as you are more than 2/3rd into your agreement you can just hand the car and walk away

[Pablo68]

Originally Posted by chetalien

as you are more than 2/3rd into your agreement you can just hand the car and walk away

Only if he had paid more than 50% of total borrowed...ie ((monthlies x pcp duration) + gfv) / 2

[moonshine]

Originally Posted by chetalien

as you are more than 2/3rd into your agreement you can just hand the car and walk away

not quite, the VT point isn't 2 /3 of the way through the pcp term, it is ½ the total amount borrowed which is normally reached something like month 31/36 but I agree that if the VT point has been reached and one is still in big negative equity then there seems little point paying another 4 months at £420 to still be £2k negative at the end.
hand it back & move on

[335i nthehouse]

Originally Posted by mgarvey

Amazing how much circumstances can vary. I put down 3500 on my 318d Sport and pay 420 a month for 10k a year, which at an APR of 3.9% seemed a decent deal at the time.

31 months into a 36 month deal, with 24k miles I have negative equity of 2000+

Other threads on this forum suggest my situation isn't unusual, so it seems there are very variable experiences - either that or the F20 holds its value an awful lot better!

That sounds terrible - is this as 318 is one of the more popular variants?

[E60MKF]

Originally Posted by mgarvey

Amazing how much circumstances can vary. I put down £3500 on my 318d Sport and pay £420 a month for 10k a year, which at an APR of 3.9% seemed a decent deal at the time.

31 months into a 36 month deal, with 24k miles I have negative equity of £2000+

Other threads on this forum suggest my situation isn't unusual, so it seems there are very variable experiences - either that or the F20 holds its value an awful lot better!

wow thats pretty odd in my eyes, high deposit and high monthlies = negative equity. I pay less than that on my F10 per month! I never put in a big deposit ((£1k max) I put £700 for my F10 and around £6-800 for the F20) as it is wasted money you will never see again.

[Geo's comps]

I put down 5k into pcp, although dependent how I feel at the end of 48 months I might purchase it or get something else... It's too soon to make up my mind as I have only had my car for 8 days

[Msportman]

I still find PCP's a strange concept probably as it seems a very expensive way of renting or getting into a car. The APR's are normally quite high compared to a loan and the monthly payments are usually quite high when you factor in say the cost of your average 320d let alone a 335d.

I like to own my cars and usually have bought 3yr old cars which have already lost a shed load so having owned it for a year or two then sell on privately.

I don't think I would like to buy an M4 until at least 3-4yrs old to make a colossal saving due to depreciation. I wouldn't by a mainstream model new that's for sure.

Sales rep from BMW said most people are happy to fork out £400-550 a month over 3yrs and then hand the car back with nothing to show except maybe a small sum towards the next deposit......looking at it now it seems a total waste per month with nothing much after 3-4yrs. New mainstream BMW's are so common it doesn't feel like a 'special' vehicle to me other than it's nicer than a rep mobile Focus or Mondeo,

[....,,,,..,,..]

Originally Posted by Msportman

I still find PCP's a strange concept probably as it seems a very expensive way of renting or getting into a car. The APR's are normally quite high compared to a loan and the monthly payments are usually quite high when you factor in say the cost of your average 320d let alone a 335d.

I like to own my cars and usually have bought 3yr old cars which have already lost a shed load so having owned it for a year or two then sell on privately.

I don't think I would like to buy an M4 until at least 3-4yrs old to make a colossal saving due to depreciation. I wouldn't by a mainstream model new that's for sure.

Sales rep from BMW said most people are happy to fork out £400-550 a month over 3yrs and then hand the car back with nothing to show except maybe a small sum towards the next deposit......looking at it now it seems a total waste per month with nothing much after 3-4yrs. New mainstream BMW's are so common it doesn't feel like a 'special' vehicle to me other than it's nicer than a rep mobile Focus or Mondeo,

Remember not everyone gets a low apr for a loan, a bloke at work bought his 1 series, however as he is not a home owner, he has gets a higher apr.

After 30 odd years of owning cars, I think about 5 years is the maximum have not paid out for loan etc on a car.

However, owning 2-3 cars, pretty much means a constant replacement cycle.

Yes BMW are exceptionally common, more so than Mondeo's, mainly as BMW are the rep mobile of choice - they are Clittoral Cars.

I am even seeing more and more 6 series, we have 2 on our street, again decent deals obviously make them an option to people.

[robwils]

Originally Posted by Msportman

I still find PCP's a strange concept probably as it seems a very expensive way of renting or getting into a car. The APR's are normally quite high compared to a loan and the monthly payments are usually quite high when you factor in say the cost of your average 320d let alone a 335d.

I like to own my cars and usually have bought 3yr old cars which have already lost a shed load so having owned it for a year or two then sell on privately.

I don't think I would like to buy an M4 until at least 3-4yrs old to make a colossal saving due to depreciation. I wouldn't by a mainstream model new that's for sure.

Sales rep from BMW said most people are happy to fork out £400-550 a month over 3yrs and then hand the car back with nothing to show except maybe a small sum towards the next deposit......looking at it now it seems a total waste per month with nothing much after 3-4yrs. New mainstream BMW's are so common it doesn't feel like a 'special' vehicle to me other than it's nicer than a rep mobile Focus or Mondeo,

Yes I must admit, paying all that money and having nothing to show does not sit well with me. Mind you the amount of depreciation on my current car is not inconsiderable. I've 'lost' a lot and I did work out it was cheapest way to own the car after the term, (13K deposit with 21 on bank loan).

Looking at graphs of depreciation, the first year (maybe even less) is a big hit. I think dealers disguis this with some people taking out a further PCP as there getting another deal and therefore a good commission from finance company.
Depends which way you look at it, but the depreciation in the asset must paid for somewhere.

This could be the next financial bubble to burst !