Ford Options - Couple Clarifications?

[ZeroNow]

Hey everyone,

I bought my mk7 fiesta last june on Ford Options finance. Now it's almost a year since I got it and I've already forgotten some details of the Ford Options finance deal. Can someone help me out?

So at the end of my period (two years) I have the three options, one of them being trade up, but what exactly happens? My GFMV thingy is roughly 5k. So when I trade for a new car, do I get 5k value, or the the money I spent (about 7k)?

Also, is it possible to end the finance one year in to get a newer car with better features? What are the drawbacks?

If anyone could help that would be great, Thanks.

Andy

[AndrewL]

Hi Andy,

According to Ford, at the end of the finance agreement you have three options,

1) Give the car back to Ford and walk away - you lose nothing (apart from what you've already paid) or gain nothing at this point (providing the car is in acceptable nick)

2) Get a new car from the dealer (on finance or otherwise) and use any value which the car has over the GMFV towards the new one. They always value the car at less than it is actually worth in the GMFV for two reasons - to make you pay more over the finance period, and to encourage you to get a new car from them at the end as you've got money 'invested' in it as it stands. I don't know what spec your car is, but an estimate for a 2008 '08' Fiesta 1.4 Zetec with 24k miles is,

"Dealer £9,335

Private £8,385

Part exchange £7,815

Trade £7,500

Cost new £12,795 " http://www.whatcar.com/valuations/result?makeId=1&modelId=1468&editionId=1494&yearId=37&mileage=24000

This means is you're GMFV is 5k and Ford value it at about 8 then you'll have 3k to put towards a new car. (This is just an example but seems feasible.)

3) You can also refinance the remainder owed on the car, keep it and keep paying monthly or buy it buy paying the GMFV

4) This isn't what Ford tell you to do but if you can manage it, take out a short term loan, pay off the remainder owed on the car (either the GMFV at the end of the agreement or the Settlement figure before the end) and sell it privately for much more than they would give you - pay off the loan and keep the extra!

As for ending the finance early, I think you can do it after 12 months, but you have to pay a settlement figure which is what you owe on the car above the GMFV. If you imagine the value of the car including depreciation, compared to the amount owed and the amound you're paying, it only really seems viable to give it back after two years as a minimum in my opinion. If you're clever you could plot the value of the car compared to the amount owed to calculate the best time to get rid ... could be risky as the valuations aren't definite and you can never guarantee it'll sell quickly.

Hope this helps.

Edit, I just realised that I perfectly guessed the spec of your car. :D

[ZeroNow]

thank you so much for your reply that helped a lot. A friend had a car on a similar finance option and a few months before the end of the finance period he sold it privately and paid it all of on loan so he could get a new car early. Just wondered my options.

Keeping it until the finance ends, using a loan to keep it and then selling it privately sounds like my best option.

Thanks again for your help.

Andy