Renewed PCP - Trade in value vs GFMV

artheb

Hello,

Here is the question as I don't seem to find many real answers.

I wonder what is the real trade in value against the balloon payment (GFMV) when you renew your pcp by trading your car in and letting dealer to clear the balloon payment. I would specifically like to hear about the over mileage situation. Let's take following as an example.

VW passat - value 36000e, deposit 8000e, 3y PCP with 32000km annually
monthly - 400e
GFMV 17000e

Let's say that I have done 40000km a year so after 3 years car has mileage of 120000km - 24000km more than agreed.

I want to trade in this car and start a new PCP finance. How much would I get against GFMV assuming that car is in very good condition and serviced with the dealer.

Would I get more or less than GFMV?

Thanks.

bazz26

You need to get more than 17000 for it as a trade-in allowance, the difference between the GFV and trade-in value would be your deposit towards the next car and PCP deal. The high mileage will just devalue your trade-in value.

colm_mcm

I think GMFV is usually around 30% so your car would nearly always be worth a good bit more than that. The question is what the car is worth as a trade in.
The GMFV should only be an issue if you're walking away from everything.

Panrich

I looked into PCP last year and I dismised it based on the effect of high mileage on the GFMV and the penalties for exceeding the agreed annual mileage. I'm not sure what VW penalties in particular look like, but they are likely to be punitive for 8K excess per annum and greatly reduce the equity for your trade-in.

artheb

Panrich wrote: »

I looked into PCP last year and I dismised it based on the effect of high mileage on the GFMV and the penalties for exceeding the agreed annual mileage. I'm not sure what VW penalties in particular look like, but they are likely to be punitive for 8K excess per annum and greatly reduce the equity for your trade-in.

Mileage is only an issue if you are going to hand the car back. Nobody really does that. People trade the cars in and dealer clears the outstanding payment on PCP. The thing is that your car might be worth more than GFMV and that would go towards your new car. So I would like to know how much more are people getting on a trade in vs GFMV.

ps: I understand PCP, looking for real life example.

artheb

bazz26 wrote: »

You need to get more than 17000 for it as a trade-in allowance, the difference between the GFV and trade-in value would be your deposit towards the next car and PCP deal. The high mileage will just devalue your trade-in value.

Exactly, Just wonder if it would devalue below GFMV

bazz26

Maybe have a look on the likes of carzone and see what dealers are asking for them. Now I know what they give you as a trade in and what they ask for them are two different things but you might get a better understanding.

mickdw

Gfv would be only around 14k on that car id say.
Your car will be worth more than 14k so penalties wont come into it as such, more just your trade in value reduced.
As long as you are not walking away after year 3, you should be able to secure a reasonable deal. If you feel dealer who sold current car is taking the piss, you can go to another, even different manufacturer and get a price there.

Lantus

bazz26 wrote:

You need to get more than 17000 for it as a trade-in allowance, the difference between the GFV and trade-in value would be your deposit towards the next car and PCP deal. The high mileage will just devalue your trade-in value.

Minus the dealers profit. They need to sell that car at market value so if your gmfv is 17k and the market value 21k then you may get 3k equity. Just example figures but this is a hidden issue not much talked about.

When your going in you need to know what your car is worth so you can understand the margin the dealer is applying.

Toyotafanboi

The mileage penalty is 6c per km so that excess mileage should devalue the car by an additional €1500 ish

artheb

Thanks for the replies. I checked carzone and cars trade for much more than GFMV. I also think that trade in should be more than GFMV despite the mileage. Tbh, I am prepared to pay a lump of sum again towards a new deal on the top of the trade in. I just don't want to be under water with GFMV.

artheb

Toyotafanboi wrote: »

The mileage penalty is 6c per km so that excess mileage should devalue the car by an additional €1500 ish

This seems to be reasonable calculation.
Here is the interesting part. I have priced PCP with 20000km at first and the cost was 380. I then bumped it up to 32000 and repayments only increased by 20 quid a month to 400e. Unfortunately I was not able to get 40k km deal...

Topper Harley

So at 6c per km, there's a charge of about €1,500. And I imagine the trade-in allowance would be slightly lower because of the higher mileage too, so does this mean there's effectively a double charge?


Example 1 - car returned with agreed mileage:

GMFV - €17k
Trade-in allowance - €21k
Deposit toward next car - 4k


Example 2 - car returned with agreed mileage +24,000km:

GMFV - €17k
Trade-in allowance - €20k
Charge for excessive mileage - 1.5k
Deposit toward next car - 1.5k

I hope I'm not confusing matters here and someone can clarify that my understanding is way off.

artheb

Topper Harley wrote: »

So at 6c per km, there's a charge of about €1,500. And I imagine the trade-in allowance would be slightly lower because of the higher mileage too, so does this mean there's effectively a double charge?


Example 1 - car returned with agreed mileage:

GMFV - €17k
Trade-in allowance - €21k
Deposit toward next car - 4k


Example 2 - car returned with agreed mileage +24,000km:

GMFV - €17k
Trade-in allowance - €20k
Charge for excessive mileage - 1.5k
Deposit toward next car - 1.5k

I hope I'm not confusing matters here and someone can clarify that my understanding is way off.

There is no charge for the mileage excess when you trade in the car with the dealer. We are just trying to work out the trading value of the car with that particular mileage. Dealer would then clear the outstanding balloon payment. I wonder how much would be left towards a new car.

Mileage excess only applies if you are going to hand the car back to the finance. Nobody does that.

Topper Harley

artheb wrote: »

There is no charge for the mileage excess when you trade in the car with the dealer. Mileage excess only applies if you are going to hand the car back to the finance. Nobody does that.

Good to know.

artheb

Topper Harley wrote: »

Good to know.

Just to clarify.
Higher mileage than initially assumed will affect the future trading value but it will not be mileage excess penalty as such. The balloon payment to be cleared will remain the same as at the beginning which will be cleared by the dealer which you are trading the car with.

GavMan

Basically no one except dealers can answer this with any certainty. You will need to shop the car around and get the best deal for it. Which may be found outside the VW Group

artheb

GavMan wrote: »

Basically no one except dealers can answer this with any certainty. You will need to shop the car around and get the best deal for it. Which may be found outside the VW Group

Someone who has completed similar transaction could provide some numbers. I'm looking for real life example.

Cannon_fodder

Would be interested in hearing what folks are getting for their Highline Golfs in terms of trade in value over the GFMV. Some of the 3 year old golfs must be heading back in at this stage.

acronym Chilli

Cannon_fodder wrote: »

Would be interested in hearing what folks are getting for their Highline Golfs in terms of trade in value over the GFMV. Some of the 3 year old golfs must be heading back in at this stage.

This could be interesting as a crowd-sourced data project.

To folks who know more about the trade:
What info would need to be collected in order to make the data useful, but not bog people down in recording minutiae?

• Make
• Model
• Trim-level
• engine-size
• age
• mileage
• damaged (y/n/scale?)

could get a few of those from the reg alone, but people would maybe be funny announcing the reg and what they got? however, the current information asymmetry is not helpful to consumers.

Cannon_fodder

acronym Chilli wrote: »

This could be interesting as a crowd-sourced data project.

To folks who know more about the trade:
What info would need to be collected in order to make the data useful, but not bog people down in recording minutiae?

• Make
• Model
• Trim-level
• engine-size
• age
• mileage
• damaged (y/n/scale?)

could get a few of those from the reg alone, but people would maybe be funny announcing the reg and what they got? however, the current information asymmetry is not helpful to consumers.

Only thing I would add is Metallic (Y/N)
It will make an interesting read. Our Highline Golf PCP ends in April 2018

artheb

acronym Chilli wrote: »

This could be interesting as a crowd-sourced data project.

To folks who know more about the trade:
What info would need to be collected in order to make the data useful, but not bog people down in recording minutiae?

• Make
• Model
• Trim-level
• engine-size
• age
• mileage
• damaged (y/n/scale?)

could get a few of those from the reg alone, but people would maybe be funny announcing the reg and what they got? however, the current information asymmetry is not helpful to consumers.

I like the idea and happy to contribute. However I am planning to renew after 2 years.
I am sure there is a bunch of folks who are renewing this year though.

Toyotafanboi

artheb wrote: »

There is no charge for the mileage excess when you trade in the car with the dealer.

Mileage excess only applies if you are going to hand the car back to the finance. Nobody does that.

Of course it does.

They may be a little bit lenient if you are coming back to do a deal for another car but it has to be factored in.

If you are allowed 45k across 3 years and you bring the car back with 145 on on It, that has to devalue the car as the dealer will now have a car to sell with three times the average mileage.

Going considerably over the mileage allowance will put you into negative equity, no matter what option you plan to chose in year three.

artheb

Toyotafanboi wrote: »

Of course it does.

They may be a little bit lenient if you are coming back to do a deal for another car but it has to be factored in.

If you are allowed 45k across 3 years and you bring the car back with 145 on on It, that has to devalue the car as the dealer will now have a car to sell with three times the average mileage.

Going considerably over the mileage allowance will put you into negative equity, no matter what option you plan to chose in year three.

This is exactly what I said here http://www.boards.ie/vbulletin/showpost.php?p=104106488&postcount=16

Again devaluation is not a penalty. Also GFMV is usually lower than the actual trading value. It may happen that you will lose the equity and GFMV will equal the trading value or be even less. This is the reason why I started this thread to hear what people are getting on their renewal and how mileage affects it.

Not only mileage can affect the GFMV but wear and tear as well.