Deals with a MGFV
have lower monthly repayments because they only cover part of the purchase price.
CAR PURCHASE LOANS offered by the big banks are tailored to MGFVs
, allowing you to defer a percentage of the loan - a "balloon payment" - until the end of the term.
You'll also be given a Minimum Guaranteed Future Value (MGFV).
The MGFV is deducted from the price and you pay the remainder in instalments.
At the end, you can either pay the MGFV and take the car away, throw back the keys and walk away, or trade it in as part payment for a new model.
At the end of the agreement you can keep the car and pay the MGFV
, hand the car back and walk away, or trade it in for a new one.
The contract will set out a minimum guaranteed future value (MGFV
) - what the car will be worth in two to three years.
You then pay a deposit, typically a third of the value, and the monthly repayments are worked out by taking the deposit and MGFV
from the price.
The buyer has to pay the remaining amount, which is the difference between the list price and the MGFV, in instalments.
After two or three years the buyer can keep the car by handing over the MGFV. Alternatively it's possible to return the car and pay nothing more, or pick a new car.
The dealer will set out a minimum guaranteed future value (MGFV) of what the car is likely to be worth in two or three years' time.
You have to pay the remaining amount, the difference between the list price and the MGFV, in instalments.