What Is Guaranteed Future Value When Buying A Car?

Many car dealerships offer a Guaranteed Future Value option for vehicle financing. In theory, this option sounds like an unbeatable deal. You get a new car for a fraction of the price and at the end of your contract you can simply trade in your vehicle for the latest model. It’s a model of vehicle financing that is affordable for new car owners and is becoming more and more popular, but just how does it work?

Guaranteeing your cars value

As cars are deprecating assets, the odds arethat they start to lose their value the minute they are driven off the showroom floor. With market fluctuations and new car models being released all the time, it can be difficult to determine what the future value of your car will be. Thus, the guaranteed future value model sets a future price for your vehicle trade in, ultimately predetermining the value of your vehicle should you sell it in three- or four-years’ time.

Your monthly payments are then calculated based on this value. Not only does this offer a cheaper way to buy a brand-new car but you also minimise your risk of deprecation. You are left at peace of mind knowing the possible value of your car in the future, while the financing company is the one that carries the risk.

What happens at the end of the contract?

At the end of your financing contract you are essentially left with three options; you can trade in your vehicle for a new one, buy the car at the stated value with the money you’ve won playing online Bingo NZ or any other available funds, or return the vehicle to the dealership and walk away.

You don’t have the hassle of trying to sell your vehicle after the contract term is up and you’ll have ended up paying significantly less to drive a new car every month, however if you decide you still like the vehicle then you’ll need to look at refinancing options which can be quite expensive or you’ll need the cash to settle the outstanding amount.

How does the contract work?

While this is a more cost-effective form of car ownership, it is necessary to comply with several conditions to meet the guaranteed future value when it does come round to the end of your contract. This includes having your car regularly serviced, ensuring the vehicle is kept in a good, undamaged condition and keeping your mileage below a certain amount. This obviously excludes any normal wear and tear that is expected throughout the years.

If you don’t comply to these conditions you could have to pay fines for exceeding the mileage, pay to have any damage repaired, or in extreme cases your contract could be rendered null and void and you will be responsible for buying your car in full.

Another important thing to consider in this regard is that normally you will need to return to the same dealer where you bought the car from in the future in order trade in the car. Whether it’s a Jaguar or a Volkswagen. This means that your options could be limited when it comes to options later down the road.

Author: ses-recruitment

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