HERE'S A HELPING HAND WITH CAR BUYING
CAN'T afford that new car you've always craved? Considered finance but scared away by the multitude of acronyms that you're faced with in the brochures? This guide will help you break down the barriers associated with buying cars.
Guaranteed Minimum Future Value (GMFV)
This is what the finance company guarantees the car will be worth at the end of the agreement, ensuring that there are no depreciation worries for buyers.
Personal Contract Purchase (PCP)
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Fixed, low and affordable monthly payments due to a large amount of the cars value being deferred to the end of the contact. This typically comes with a GMFV and flexibility at the end of the agreement to part exchange, keep or return the vehicle.
A popular option for business customers who would rather hire a vehicle than own one, without the worry of depreciation or having to sell the vehicle on at the end of the agreement.
Vehicle Excise Duty (VED)
Most commonly known as road tax – and takes into consideration the vehicles fuel type and CO2 emissions.
Pence per mile charge should the contract mileage be exceeded.
Residual Value (RV)
The future value of the vehicle taking in to account the age and mileage at the end of your contract. This figure is usually referred to as a percentage, so if a car is worth £20,000 new and is worth £10,000 after three years, then its RV after the three years will be 50 per cent.
Wear & Tear
When normal usage of the vehicle causes deterioration. Buyers can also take out a maintenance contract, which is a one-off payment that covers the cost of vehicle servicing requirements and maintenance items.
A deal which sees the customer pay 50 per cent of the vehicle value as a deposit up-front and then pays nothing further until month 24 of the agreement. One of the three standard end-of-contract choices is then available (keep, return or part-ex).
Fixed regular payments spread over an agreed period with no mileage restrictions. Provided all payments are made by the end of the contract, the vehicle is then yours to keep.
If your car is written off or stolen, this insurance pays the difference (or gap) between the car invoice value and your insurance pay out.