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Guaranteed Future Value (GFV)

Guaranteed Future Value (GFV) is an important part of a Personal Contract Plan (PCP) so here we explain all about it

The Guaranteed Future Value (sometimes known as the Guaranteed Minimum Future Value, optional final payment or balloon payment) is when a finance company guarantees what your car will be worth at the end of your finance term, regardless of its true depreciation.

What is Guaranteed Future Value (GFV)?

Every car depreciates in value over its lifetime, but some depreciate quicker than others, meaning they end up with a lower second hand value. In a PCP agreement the finance company will predict what the value of your car will be worth at the end of the contract. This is based on your estimated mileage, the brand of vehicle, length of your agreement and the model itself and then guarantees this value as a minimum your car will be worth when your contract expires. 

How is the Guaranteed Future Value (GFV) calculated?

When you apply for a Personal Contract Plan (PCP), your monthly finance payments are calculated from the difference between the new car costs, minus any deposit, and the GFV plus interest. This means the monthly payments are likely to be lower than with Hire Purchase.

At the end of your agreement, if you’d like to keep your car, you’ll need to pay off your GFV in an Optional Final Payment. This essentially ends your contract and makes you the official owner of the car.

What if the used car market falls in value?

Guaranteed Future Value is exactly what it says – guaranteed. So even if used car values do drop unexpectedly, it’s the finance company that carries the risk, not you.

All this means you can hand your car back without losing a penny.

How do I arrange a Guaranteed Future Value (GFV) agreement?

Guaranteed Future Value (GFV) is a component part of a Personal Contract Plan, so would be arranged at the same time via your dealer or finance provider. 

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