Intentionally lowering your GFV

[thewanted]

Hey all,

I had a chat with a new car salesman on the weekend, and when I said that I was reluctant to take PCP, he said that they could lower my GFV so that I would have a smaller lump sum at the end since my intention is to own the car. I was initially set on taking Hire Purchase, but the rate is 9.9% APR and I'd miss out on the £2350 contribution.

Has anyone done this? Would they be able to push the GFV as low as £5000 when it should be about £12000?

Cheers

 

[DrEskimo]

Make sense in principal, but it might still be more expensive than buying outright with a personal loan.

If you have good credit, you can get a loan for about 3.3%. Remember, unlike the PCP where you have the final payment, with a personal loan the loan amount will reduce much quicker over the length of the term, so the amount of interest you pay will be much lower.

All very well having an extra £2k in contribution, but if you are paying £3k more in interest then its not really worth it!

Add up what the total cost will be at the end of the agreement (deposit + monthlies + final payment) and then compare that to the cost of the car without the contribution + the interest of the personal loan.

 

[AndyT306]

also depends what car you go for, my deposit contribution was £6k!

 

[B5NUT]

What car are you buying @9.9% Audi's new car rates appear to be between 6.9% & 2.8%. Used car rate appears to be around 11.9% which is appalling.

 

[thewanted]

Sorry for the delayed response. Work has been manic this week I was also waiting to speak with Broadspeed to find out how the contribution factors into their discount.

I am in the market for a new A4 Avant. My spec on Broadspeed comes out to £34500. They tell me that the contribution is made up of two parts - £1000 from Audi, and £1350 from the dealer. If I don't take PCP, then the price goes up by £1000.

So, in order to work out what the cheapest way of financing the car is, I've done some calculations:

1) PCP: Invoice = £34500

£386.15 x 42 months
+ £15000 part-ex
+ £5000 GFV
= £36,218.30

pcpcal.co.uk

2) Personal loan - borrowing £20500 @ 3.5% (Sainsbury's):
Invoice = £35500 (I lose the £1000 contribution from Audi)

£410.36 x 54 months
+ £15000 part-ex
= £37,159.44

Unless my maths is completely off, PCP is cheaper by £941 as long as they can push the GFV as low as £5000.

 

[DrEskimo]

Nope looks right to me. Since the rate is only 3.9% front audi it works out pretty well.

I think the repayment period is just 41months though, as the final month is the GFV.

The extra £5k will mean you you need to save an additional £120 a month over a 41month term, bringing your total monthlies to about £500. If you reduce the term of the personal loan to 42months as well, is it less than £500pm? That will technically still be similar cost per month, and that should reduce the interest to a lower amount over just 42months.

Just a though if you can get the GFV that low.

 

[thewanted]

Nope looks right to me. Since the rate is only 3.9% front audi it works out pretty well.

I think the repayment period is just 41months though, as the final month is the GFV.

The extra £5k will mean you you need to save an additional £120 a month over a 41month term, bringing your total monthlies to about £500. If you reduce the term of the personal loan to 42months as well, is it less than £500pm? That will technically still be similar cost per month, and that should reduce the interest to a lower amount over just 42months.

Just a though if you can get the GFV that low.

The £20500 personal loan works out to be £518.81/month over 42 months @ 3.5%. PCP still works out to be £571 cheaper (based on 42 payments even though you said 41).

If I can reduce the loan to £19500, then the rate drops to 3.2% and it's £490.99/month over 42 months. This makes the loan about £600 cheaper than PCP (still based on 42 payments).

I honestly don't think it'll be easy at all to get a £19500 loan at 3.2%. I know of a few people with excellent credit history that have tried to get these ultra-cheap loans, and the lender always comes back with a much higher rate. My credit history is perfect, but I just bought a house which probably won't do me any favours.

I appreciate the help DrEskimo

 

[DrEskimo]

The £20500 personal loan works out to be £518.81/month over 42 months @ 3.5%. PCP still works out to be £571 cheaper (based on 42 payments even though you said 41).

If I can reduce the loan to £19500, then the rate drops to 3.2% and it's £490.99/month over 42 months. This makes the loan about £600 cheaper than PCP (still based on 42 payments).

I honestly don't think it'll be easy at all to get a £19500 loan at 3.2%. I know of a few people with excellent credit history that have tried to get these ultra-cheap loans, and the lender always comes back with a much higher rate. My credit history is perfect, but I just bought a house which probably won't do me any favours.

I appreciate the help DrEskimo

Yea think you are right. Few years ago I went with Tesco for a personal loan and despite having near perfect credit rating, still got a good 1 or 2% above the advertised rate...!

Sounds like the PCP may be the best option! Hopefully they can lower the GFV that much! They will be losing out on a pretty good chunk of interest, so interesting to hear if they can!

 

[thewanted]

Yea think you are right. Few years ago I went with Tesco for a personal loan and despite having near perfect credit rating, still got a good 1 or 2% above the advertised rate...!

Sounds like the PCP may be the best option! Hopefully they can lower the GFV that much! They will be losing out on a pretty good chunk of interest, so interesting to hear if they can!

I've sent a dealer a message on CarWow to see if it's possible I'll update this ticket with the result since I wasn't able to find any other posts about someone attempting to do this.

 

[AndyT306]

why don't you just take out standard PCP, and then overpay every month?

 

[thewanted]

why don't you just take out standard PCP, and then overpay every month?

Would that involve phoning Audi Financial Services every month, or could I simply create a standing order to overpay?

 

[AndyT306]

i'm pretty sure you can just change your DD, or set up a standing order - it's something my dealer discussed with me as an option of ending my PCP earlier if I wanted a new car

at least then you have flexibility

 

[thewanted]

I've sent a dealer a message on CarWow to see if it's possible I'll update this ticket with the result since I wasn't able to find any other posts about someone attempting to do this.

As promised, the dealer I asked said that they are able to drop the GFV to £5000

 

[jojo]

Yea think you are right. Few years ago I went with Tesco for a personal loan and despite having near perfect credit rating, still got a good 1 or 2% above the advertised rate!

On the subject of personal loans, I got my loan offer originally from Natwest, who I've banked with since the dawn of day, and they was approx. 1% above the advertised rate! But before I signed and returned the forms, I thought I'd see how much Tescos was? They was 0.2% above the advertised rate using my active Tesco clubcard number. Sainsburys had at the time a guarantee to beat other rates by 0.1% if I have the offer in writing! I just went with Tescos in the end, as I only had a week before I picked my car up! Turnover for the loan to be in my account was 4 days?

Pays to shop around basically, but be careful you don't over do it! Every time you apply for one, you get credit checked, and that drops your credit rating in the short term.

 

[DrEskimo]

On the subject of personal loans, I got my loan offer originally from Natwest, who I've banked with since the dawn of day, and they was approx. 1% above the advertised rate! But before I signed and returned the forms, I thought I'd see how much Tescos was? They was 0.2% above the advertised rate using my active Tesco clubcard number. Sainsburys had at the time a guarantee to beat other rates by 0.1% if I have the offer in writing! I just went with Tescos in the end, as I only had a week before I picked my car up! Turnover for the loan to be in my account was 4 days?

Pays to shop around basically, but be careful you don't over do it! Every time you apply for one, you get credit checked, and that drops your credit rating in the short term.

Well that was it. I had the offer and they said I could decline and go elsewhere but I didn't fancy having multiple searches done on me on the whim that I could get slightly better rate elsewhere. I think they fully know this....!