Agility -Future Value & Equity Question

[travelininstyle]

Hello all - popped along to the Dealership today to discuss purchasing a car using Agility.My car is worth 6.2k - 6.5k as a deposit.Car I want to purchase is valued at 17.5k - if I opt for low payments of £158 monthly,I will be left with a final payment of about 9.7k - obviously I can opt to reduce this by paying more on my monthly payments,but assuming I go with the above calculation and payments - I cannot understand how they arrive at the 9.7k
Secondly,if this is a GFV - if I chose instead to hand the car back,less (no doubt,with some draconian charges at the end)supposedly there is a possibility to receive some accrued equity at the end of the contract Question is how and where is this potential equity calculated from
and in reality - has any member ever received any equity to use as a future deposit at the end of their Agility - or is it a 'jam tomorrow' empty promise ?
And finally,the GFV seems inflated to me - I was expecting closer to 6k - - I am hoping to make some decisions soon,so as ever,members experience is invaluable.

 

[st4]

Hello all - popped along to the Dealership today to discuss purchasing a car using Agility.My car is worth 6.2k - 6.5k as a deposit.Car I want to purchase is valued at 17.5k - if I opt for low payments of £158 monthly,I will be left with a final payment of about 9.7k - obviously I can opt to reduce this by paying more on my monthly payments,but assuming I go with the above calculation and payments - I cannot understand how they arrive at the 9.7k
Secondly,if this is a GFV - if I chose instead to hand the car back,less (no doubt,with some draconian charges at the end)supposedly there is a possibility to receive some accrued equity at the end of the contract Question is how and where is this potential equity calculated from
and in reality - has any member ever received any equity to use as a future deposit at the end of their Agility - or is it a 'jam tomorrow' empty promise ?
And finally,the GFV seems inflated to me - I was expecting closer to 6k - - I am hoping to make some decisions soon,so as ever,members experience is invaluable.

Welcome to the world of APR's etc.

With a deal like that, you want the GMFV to be very high, lowers the monthly. Chances are you'll be in negative equity when you hand the car back, which is good. It means if you bought it on HP you'd bear the brunt of its lower value, not them.

A deal like this is ideal for someone who will definitely change cars once the deal is up.

 

[travelininstyle]

Welcome to the world of APR's etc.

With a deal like that, you want the GMFV to be very high, lowers the monthly. Chances are you'll be in negative equity when you hand the car back, which is good. It means if you bought it on HP you'd bear the brunt of its lower value, not them.

A deal like this is ideal for someone who will definitely change cars once the deal is up.

*** - Unless I have interpreted this wrong - what I understand from your comments are that this deal only works if you walk away - I do not understand the remark about negative equity - I always assumed this to be bad - negative equity means no deposit ? - but does this mean that the seller is picking up this bad part of the deal ?

Thanks
Mr t

 

[st4]

*** - Unless I have interpreted this wrong - what I understand from your comments are that this deal only works if you walk away - I do not understand the remark about negative equity - I always assumed this to be bad - negative equity means no deposit ? - but does this mean that the seller is picking up this bad part of the deal ?

Thanks
Mr t

You are putting down a very large deposit, negative equity will not happen, but as far as you are concerned the car will be worth the GMFV, but you will hand it back before you pay it.

That deposit, i.e. your old car, that just reduces the monthly on this car, the next car you'll have to find £5k cash or so if you want a similarly low payment on a new car.

Assume there will be no equity in the deal for you when you hand the car back, they will want to make sure you fork out as much as possible for the next car. If you dont walk away, you have that nice 9 grand GMFV to pay. Liken it to having a 15 grand loan over 3 years only you do not pay an even amount back over the 3 years. You repay 7 grand over 3 years cheaply, and that 8grand bill is waiting for at the end unless you give them the car back just before the 3yrs is up. It means your repayments are cheaper, and if the car is worth 9grand, you have 1 grand of equity for your next car, but if its worth 7 you give them it back, and its negative equity but its them that pay. Its not your problem

Deals like this, in my opinion are great on new cars where you put down a low deposit, but you are not, and its not on a new car. A conventional bank loan or HP would just be more transparent and easier on you.

 

[travelininstyle]

*** - thanks for your input,you have made it extremely transparent and I feel far more informed about what decisions lie in front of me now and it is nice to get the low down from a fellow member,rather than pressurized guff of a salesman.

 

[st4]

Glad to help

Anyone else care to input onto this one.

However, personally, I dont feel its that good a deal in reality. You are getting rid of a whole car, paid up, and a nice car too.

That cars value essentially you lose to reduce a monthly repayment on a car you will not own at the end, you will hand it back. It forever ties you into changing cars.

Personally, and I trying not to be too rude or blunt here, it would be give you more flexability and choice if you can or choose to afford to buy the CLK220cdi outright, or take out a conventional HP loan. PCPs are great on new cars, but punatively high interest rates on used cars as they represent more of a risk for negative equity for the finance house (so they recoup this in interest, which you pay on the whole sum borrowed, not just on the amount repaid monthly)

Lets look at it another way, for another £150pm and the deposit, you could be in a brand new C class or maybe 212 E class.

Or for another £150pm or so over 3 years, you'd fully own your CLK and be able to have it for 5 years and have 2 years of not paying anything out for a car.

It just seems a shame (and from bitter experience) of owning a car outright, to going down the route of paying finance on one, when a little waiting and saving could see you in the same car, owned outright.

 

[Rory]

Deals like this, in my opinion are great on new cars where you put down a low deposit, but you are not, and its not on a new car. A conventional bank loan or HP would just be more transparent and easier on you.

PCPs were designed to get people into new cars, and to get them to change to another new car after 3 years, because to take a loan to pay the GFV probably works out to a similar cost as going into a new PCP, so most people choose the new car.

I'm not convinced PCPs make sense on used cars.

 

[st4]

PCPs were designed to get people into new cars, and to get them to change to another new car after 3 years, because to take a loan to pay the GFV probably works out to a similar cost as going into a new PCP, so most people choose the new car.

Exactly, £300pm for a new C200cdi SE works out quite nicely for a £4k deposit. £158pm for a CLK220cdi 2008 that you've chucked in your whole car does not quite appeal

I'm not convinced PCPs make sense on used cars.

I remember buying a used X5 4.4i sport. Working out I had px'd a £10k car against it, to take out a PCP and save the £125pm over the HP on a 36month term, I'd spend an additional £2k saving to get £10k deposit for the next deposit to finance another one. The GMFV of £8k on the X5 was laugably low and they were not game for raising it.

 

[travelininstyle]

Glad to help

Anyone else care to input onto this one.

However, personally, I dont feel its that good a deal in reality. You are getting rid of a whole car, paid up, and a nice car too.

That cars value essentially you lose to reduce a monthly repayment on a car you will not own at the end, you will hand it back. It forever ties you into changing cars.

Personally, and I trying not to be too rude or blunt here, it would be give you more flexability and choice if you can or choose to afford to buy the CLK220cdi outright, or take out a conventional HP loan. PCPs are great on new cars, but punatively high interest rates on used cars as they represent more of a risk for negative equity for the finance house (so they recoup this in interest, which you pay on the whole sum borrowed, not just on the amount repaid monthly)

Lets look at it another way, for another £150pm and the deposit, you could be in a brand new C class or maybe 212 E class.

Or for another £150pm or so over 3 years, you'd fully own your CLK and be able to have it for 5 years and have 2 years of not paying anything out for a car.

It just seems a shame (and from bitter experience) of owning a car outright, to going down the route of paying finance on one, when a little waiting and saving could see you in the same car, owned outright.

Thanks Guys - I think you are right - I think,or hope this was just the opening shot from the mb salesman - but I think if I am to put my car to its best use,it would be to get a new car - or as you say,look at HP.

 

[st4]

Thanks Guys - I think you are right - I think,or hope this was just the opening shot from the mb salesman - but I think if I am to put my car to its best use,it would be to get a new car - or as you say,look at HP.

Personally you have a nice car, but fair enough you want to change. A new car would be a fab upgrade an a C class saloon a far better car (204 shape) than a CLK220cdi and the car you are in.

The 204 is getting facelifted, they could be doing deals on old stock of the pre facelift, which is still a damn nice car.

HP on a used car should work out cheaper, but you need to sit down with a spreadsheet/calculator and work it out.

 

[travelininstyle]

Personally you have a nice car, but fair enough you want to change. A new car would be a fab upgrade an a C class saloon a far better car (204 shape) than a CLK220cdi and the car you are in.

The 204 is getting facelifted, they could be doing deals on old stock of the pre facelift, which is still a damn nice car.

HP on a used car should work out cheaper, but you need to sit down with a spreadsheet/calculator and work it out.

I think that Agility can definitely be ruled out on a used car,its the wrong tool for the job - I think I would do better to go for HP and try to get a good discount - at least after three years,I have some equity in the vehicle again - I will look at the W204 out of interest.

 

[Smiley]

Thanks Guys - I think you are right - I think,or hope this was just the opening shot from the mb salesman - but I think if I am to put my car to its best use,it would be to get a new car - or as you say,look at HP.

"The best use" of your existing car is to keep it.
You can fund a lot of fuel and repairs from all the money you are talking about.

 

[st4]

"The best use" of your existing car is to keep it.
You can fund a lot of fuel and repairs from all the money you are talking about.

true but sometimes you want a new car. The best use of my old E220cdi was to keep it, it was a wonderful car, but I px'd and lifted 6grand from my bank account to buy "the shed". Financially that £6k would have fueled and ran the car for a year and I would be wealthier, but I wanted a more powerful car.

You pays yer money, you makes yer choices

I think that Agility can definitely be ruled out on a used car,its the wrong tool for the job - I think I would do better to go for HP and try to get a good discount - at least after three years,I have some equity in the vehicle again - I will look at the W204 out of interest.

After 3 years on HP you will own the car completely, not have some equity.

Some of the new agility deals are smashing on new cars but on a used one reading yours it looks a turkey.

 

[Smiley]

true but sometimes you want a new car. The best use of my old E220cdi was to keep it, it was a wonderful car, but I px'd and lifted 6grand from my bank account to buy "the shed". Financially that £6k would have fueled and ran the car for a year and I would be wealthier, but I wanted a more powerful car.

You pays yer money, you makes yer choices


After 3 years on HP you will own the car completely, not have some equity.

Some of the new agility deals are smashing on new cars but on a used one reading yours it looks a turkey.

Thats Ok at least you owned one car, took some cash out of the bank and now own another car.
But to own one car and use it as a deposit, then pay a monthly "rental" and then at the end own nothing ......strikes me as a tiny bit er "stupid"? (not wishing to be harsh on the OP)

 

[travelininstyle]

Yes Guys - over the weekend I had a lot of time to do the math and consider my options and I quickly concluded that Agility was definitely not for me on a used car - I think the appeal was reduced monthly payments - but then to pay such a large sum at the end,just did not stack up.I think I can live with using the current car as a deposit and go for HP - get the APR down as low as I can and if I really need to reduce my monthly outgoings,go for 48 monthly payments this time instead of 36 - but at least I would have ownership at the end of the term - but all your advise has been invaluable.
I am having some interesting Dealership experiences at the moment - from rudeness and indifference - to old fashioned courtesy - the quality of service at some dealerships is truely shocking - as cynical as the car purchasing may be - I still want to build some sort of relationship.