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IS YOUR FINANCE AGREEMENT FUTURE PROOF?

By Various
Friday, April 5, 2019

HAVE YOU SUBSCRIBED TO THE JOURNAL? CLICK THE LINK ABOVE

 

IS YOUR CURRENT FINANCE

AGREEMENT FUTURE PROOF? 

 

Money

  

With a huge cloud of uncertainty hanging over the UK in the face of the unknown that is Brexit, many individuals face tough financial choices ahead. With this in mind, any future assurances are worth taking note of. If we told you that we can guarantee the value of your car at the end of its financial term, you’d be intrigued right? 


Unless you’re buying a collectible classic or a limited-edition supercar, it’s pretty much a given that all vehicles will depreciate in value over their lifetime, particularly over the first couple of years.

 

finance2

 

 

However, thanks to a part of our finance lenders agreements known as the Guaranteed Future Value, or GFV, Personal Contract Plan (PCP) you can be reassured that you are protected against depreciation. 


Also known as Guaranteed Minimum Future Value, the GFV is how the finance provider guarantees the car’s minimum future residual value regardless of true depreciation. This is the estimated figure that will be outstanding at the end of the finance term, at which point you’ll decide whether to keep the vehicle by paying the balance – called an Optional Final Payment or Balloon Payment – or to hand it back, or to trade it in. 

 

 

Coins

 


 

This guarantee helps to minimise your risk from depreciation. If your car drops in value more than was predicted, the finance company will incur any shortfall. You could hand it back with nothing more to pay – even if, at that time, it’s worth much less on the actual market than the GFV. 


All sorts of outside factors can exacerbate depreciation, and some cars can drop in value more quickly than comparable models. So, having a GFV brings real peace of mind should second-hand prices plummet unexpectedly. It’s the finance company that carries the risk, not you. 


You don’t have to do anything extra to organise a GFV; it’s a component part of all our PCP agreements so it is calculated at the same time as setting up the contract via our finance lenders. 

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