Paying off PCP Early

[W8PMC]

Having said that, looking at Porsche's 3 year residuals, you'd be mad to go Turbo S as there's only 5k in it at 3 years.

Is that guaranteed residuals? Porsche told me off the bat that the GFV difference isn't great, but the reality is better. Also no matter what spec you put on the car, the GFV will remain static although again the reality is the car would be worth more.

[Ian_C]

One piece of advice - make sure when you speak to them to cancel (if you do) you tell them you are exercising your right to withdraw within the cooling off period, otherwise they will treat you as though you are paying off the outstanding balance and it will cost you more. They will not explain the difference to you.....

Very good point.

Having said that, looking at Porsche's 3 year residuals, you'd be mad to go Turbo S as there's only 5k in it at 3 years.

Is that guaranteed residuals? Porsche told me off the bat that the GFV difference isn't great, but the reality is better. Also no matter what spec you put on the car, the GFV will remain static although again the reality is the car would be worth more.

Can you imagine how complicated things would be if the GFV changed according to options? It would be a completely nightmare to calculate! Its complicated enough already!

[Mr V10]

...... I think the GFV seems to be tied into how much interest you are going to pay over the period of the PCP. Which makes sense from Audi's perspective I suppose!

The GFV has nothing to do with the interest you will be paying. It is only affected by the length of the agreement, the model of the car, the agreed mileage and a prediction of the future market.

If you increase the deposit, you will pay less interest, because you are borrowing less.

Audi/BMW... Finance generally want to set the GFV at about or up to 10% less than they (through CAP) think the car will be worth at the end of the term. They want the customer to have equity in the car so that a new purchase is more appealing.

Sorry you're wrong about the GFV it is definitely linked to the payments Just checked with the salesman again.

I have two quotes from the dealer in front of me. Both over 24 months and 8000 miles per annum.

First one has the max deposit of £43k and monthly payments of £518.81 per month. The GFV is £35k. Total amount payable £89,942

Second one. Deposit of £27k with monthly payments of £631.12. The GFV is £49,875. Total amount payable is £91,400.

If you think about it the GFV has to be driven by the amount outstanding as it is driven by how much you need to pay for the car in total. So by overpaying so much during the two year course of the loan you are left with a low GFV.

GFV is actually a slightly misleading term it's primarily driven by how much you have left to pay not be the residual. They sell it as a residual but it's not really it's the third element of the payment for the car. The reason it looks like a GFV is that in most cases they model the transaction so that you get left with a lump sum just below the value of the car so that you have a small amount of equity inducing you to buy a new car.

PCP's are really leases structured to make you a repeat customer. I.e. You're forced into a conversation because of that trapped equity at the back end.

This isn't true, speak to the business/finance manager there and get some clarity on the quote. It makes no sense.

The GFV is influenced by the term and mileage only, and in the case of TT/Q7, some options, tech pack for example, will give a stronger GFV, too. You can put down £5,000 deposit or £50,0000. The GFV is the same.

I was working on a Q7 S Line PCH quote last week, and the 21" £1,400 wheel upgrade made no difference to payments, as the GFV was that much higher!

[Shinobi675]

How does the interest work on it? I didn't think you could pay it off early

[Mr V10]

Is the invoice price exactly the same on both quotes? I'm wandering if one is for a standard RS6, and the second for an RS6 PE? Clutching at straws, as the PE has a circa £5k higher residual.

The bigger deposit is buying you a lower monthly payment, and won't effect your final payment.

The only thing I can think of is your dealer has adjusted the GFV manually to give you more equity at the end. But you can't really do that by accident, and this would have been explained to you.

[Mr V10]

How does the interest work on it? I didn't think you could pay it off early

You get a rebate.

[Shinobi675]

How does the interest work on it? I didn't think you could pay it off early

You get a rebate.

Oh those little buggers!!! When I called up for a settlement value they said It was the same as just paying the instalments!

I'm glad you responded as I was writing a letter to the ombudsman saying this doesn't feel right... Clearly because they lied to me!

[doodlebug]

Having said that, looking at Porsche's 3 year residuals, you'd be mad to go Turbo S as there's only 5k in it at 3 years.

Is that guaranteed residuals? Porsche told me off the bat that the GFV difference isn't great, but the reality is better. Also no matter what spec you put on the car, the GFV will remain static although again the reality is the car would be worth more.

Yes, details on the Porsche site now. 5k difference after 3 years/10k per annum. TTS residual was just under 71k.