GR86 GR86 - The Toyota Finance Thread

[ljb86]

So I sent a complaint last night with some of the questions we all have. Had an email response this morning. Some interesting points raised.

Looks like I’m definitely getting a car, as are we all, but with a 2023 delivery date with an email confirmation of 10:38. Interesting finance deal may change if GFV is amended!

Full email:
I notice you have sent multiple emails which have not been responded to, so can I firstly apologise that these have been overlooked. I will try my best to address all of your questions in your emails below:

Firstly, I can confirm we have one vehicle ordered for you, not two, and any finance application which has been done at a Toyota Centre can be transferred over to ourselves. The advertised finance rate will be honoured for any vehicles which are taken delivery in 2023 - however the Guaranteed Future Values are subject to change, which may have an impact on the monthly payments.

I can confirm we have received your order and this is currently waiting to be processed into our system. Whilst I am not currently able to provide you with any accurate ETA, I would be confident looking at the time your order came in to suggest that your vehicle will not be arriving until 2023. We are aware of online speculation suggesting that some customer's who placed an order will not be getting a vehicle - I would like to confirm that this information is incorrect.

Finally, I would like to reassure you that regardless of when we process your order, or make an outbound welcome call to you, this will not impact the ETA of your order in any way.

I hope this email helps to answer your questions, and we will be in touch with you again as soon as we can.

I (and I assume others!) can't extend my current balloon payment without an ETA so they need to hurry up with getting in touch with people?!

Shame the GFVs are likely to change, hopefully not significantly. Imagine purchasing a GR86 on 20/04 thinking your payments are going to be £299 and within your budget and then in 2023 they're suddenly now £350, for example, and you can no longer afford it. Even if the GFV drops a couple of grand it's going to have a big impact, especially if your part-ex value is also not as high as it is currently.

 

[Al4n]

I (and I assume others!) can't extend my current balloon payment without an ETA so they need to hurry up with getting in touch with people?!

Shame the GFVs are likely to change, hopefully not significantly. Imagine purchasing a GR86 on 20/04 thinking your payments are going to be £299 and within your budget and then in 2023 they're suddenly now £350, for example, and you can no longer afford it. Even if the GFV drops a couple of grand it's going to have a big impact, especially if your part-ex value is also not as high as it is currently.

Given the used prices and exclusivity of the GR86 I would argue the GFV should go up

 

[KobayashiMaru86]

Given the used prices and exclusivity of the GR86 I would argue the GFV should go up

I'm hoping it doesn't go up as if it's locked at what it is, it should mean a good return later. A £17k chunk to refinance or pay off outright is better than £20k

 

[WWGR86]

Given the used prices and exclusivity of the GR86 I would argue the GFV should go up

That’s what I am thinking as well. GFV should go up rather than down .

 

[AndyRC]

That’s what I am thinking as well. GFV should go up rather than down .

It will be interesting to see how Toyota deal with GFV , most manufacturers tend to be on the conservative side of things

 

[Al4n]

It will be interesting to see how Toyota deal with GFV , most manufacturers tend to be on the conservative side of things

I would agree. I actually thought Toyota were pretty good which made the monthly payments more affordable.

 

[WWGR86]

It will be interesting to see how Toyota deal with GFV , most manufacturers tend to be on the conservative side of things

I will be totally disappointed if they are going to lower the GFV …As other members said it will affect my monthly payment and my initial deposit as well..

 

[ZN8]

I will be totally disappointed if they are going to lower the GFV …As other members said it will affect my monthly payment and my initial deposit as well..

But what if it goes up?

 

[gr-fun]

I will be totally disappointed if they are going to lower the GFV …As other members said it will affect my monthly payment and my initial deposit as well..

Unlikely to change significantly, GR Yaris hardly changed from the initial quotes in late 2020 to now - from memory the residuals have been changed once in 18 mths.

 

[beorg]

But what if it goes up?

Presumably that will lower the required deposit if people want to stick to £299/m but increase the final payment and interest paid as a result.

 

[WWGR86]

But what if it goes up?

You will pay less deposit or monthly payment accordingly as you borrow less money effectively.

 

[beorg]

You will pay less deposit or monthly payment accordingly as you borrow less money effectively.

Counterintuitively a higher GFV means a higher level of borrowing and interest paid, as the interest rate is calculated on the total value of the car minus initial deposit.

That's assuming you lower your initial deposit or lower the monthlies and finance the final amount if keeping the car.

 

[WWGR86]

Also, what I can think of is that do we have to apply for the new finance deal again if the GFV is changed? Correct me if I am wrong - We have applied to the current finance deal which the deposit and repayment amount should be fixed and cant change as it has gone through hard credit check? If GFV will be changed, which leads to our deposit/monthly repayment be changed, do we have to apply for a new deal and credit search again even Toyota is going to honour the 4.9% apr offer?

 

[WWGR86]

Counterintuitively a higher GFV means a higher level of borrowing and interest paid, as the interest rate is calculated on the total value of the car minus initial deposit.

That's assuming you lower your initial deposit or lower the monthlies and finance the final amount if keeping the car.

I thought it was the higher GFV, the less amount to be financed and hence lower monthly repayment or lower deposit to keep your desired monthly repayment or GFV is not = Final payment?

 

[beorg]

I thought it was the higher GFV, the less amount to be financed and hence lower monthly repayment or lower deposit to keep your desired monthly repayment or GFV is not = Final payment?

GFV is just an offer to purchase the car at a set value from the dealer/car finance company. It works in favour of people who use PCP as a subtitute for a lease with an option to return the car at no extra cost or purchasing it if you want to keep it. Higher GFV might also help if you are looking to "trade in" your car at the end of the PCP agreement and the car has depreciated below it's GFV (unlikely in this case but used to happen with a lot of luxury German brands).

You are always financing the entire value of the car minus any deposit paid (sometimes with a dealer's contribution to that, but it's rarer these days) and that's what the interest paid is calculated on. E.g. if you're buying a £30k with a GFV of £15k and a deposit of £5k, you are financing £25k of the car at the APR of 4.9%, not £10k. The longer the finance period, the more you will pay in interest (bear in mind the GFV will change depending on the lenght of the deal). Similarly, the lower your initial contribution, the higher the interest payment and monthly contributions (if the GFV doesn't change).

Even worse is what happens after the PCP deal expires, as if you're at the limit of your budget and you wish to keep the car, you will now need to come up with £15k of your own money, or finance that amount, extending your payments for another 3-5 years and paying even more interest back.

The way to avoid it is to opt for a Hire Purchase deal or a personal loan, however the former is often higher APR and more expensive because of the above and the latter is only available at low APR to people with good-great credit rating and affordability.

 

[Al4n]

Our credit checks would have expired. So there is a small concern that Toyota may change their ‘appetite’ by the time they do another one. Or a recent finance application/remortgage etc may push you outside of what they are willing to accept.

 

[beorg]

Our credit checks would have expired. So there is a small concern that Toyota may change their ‘appetite’ by the time they do another one. Or a recent finance application/remortgage etc may push you outside of what they are willing to accept.

If I remember correctly the PCP deal was valid until end of June or July. I don't believe Toyota will have any legal obligation to honour any financial agreements beyond that point, as it's just an offer and not a finalised contract, but I would imagine they will do it as order delays are out of control of customers and it's in their interest to complete agreed purchases.

However, almost all finance companies will perform a second credit check if the time period before the initial agreement and the start of it is over a set number of months, normally 6-12 months applies. It's all based on risk apetite of the lender/underwriter, which will be a separate division of the company in this case, and would be similar to having a mortgage offer from a bank on a house purchase which is delayed beyond the agreed offer that's valid for 6 months, but can be extended by the lender.

 

[ljb86]

Given the used prices and exclusivity of the GR86 I would argue the GFV should go up

That would be best case/possibly the most likely scenario, was purely spit-balling the disappointment if that didn't happen! Just leaves a lot of uncertainty over what you could be paying if you've already committed to a car, although I suppose you can still pull out if you have to.

 

[WWGR86]

GFV is just an offer to purchase the car at a set value from the dealer/car finance company. It works in favour of people who use PCP as a subtitute for a lease with an option to return the car at no extra cost or purchasing it if you want to keep it. Higher GFV might also help if you are looking to "trade in" your car at the end of the PCP agreement and the car has depreciated below it's GFV (unlikely in this case but used to happen with a lot of luxury German brands).

You are always financing the entire value of the car minus any deposit paid (sometimes with a dealer's contribution to that, but it's rarer these days) and that's what the interest paid is calculated on. E.g. if you're buying a £30k with a GFV of £15k and a deposit of £5k, you are financing £25k of the car at the APR of 4.9%, not £10k. The longer the finance period, the more you will pay in interest (bear in mind the GFV will change depending on the lenght of the deal). Similarly, the lower your initial contribution, the higher the interest payment and monthly contributions (if the GFV doesn't change).

Even worse is what happens after the PCP deal expires, as if you're at the limit of your budget and you wish to keep the car, you will now need to come up with £15k of your own money, or finance that amount, extending your payments for another 3-5 years and paying even more interest back.

The way to avoid it is to opt for a Hire Purchase deal or a personal loan, however the former is often higher APR and more expensive because of the above and the latter is only available at low APR to people with good-great credit rating and affordability.

If the GFV goes up, we require less deposit to achieve desire monthly repayment but need to pay more interest in the end?

Versa Vice, If the GFV goes down, we require more deposit to achieve desired monthly repayment but pay less interest?

Sorry for my ignorance. Not sure if I understand correctly, please do correct me if I am wrong.

 

[beorg]

If the GFV goes up, we require less deposit to achieve desire monthly repayment but need to pay more interest in the end?

Versa Vice, If the GFV goes down, we require more deposit to achieve desired monthly repayment but pay less interest?

Sorry for my ignorance. Not sure if I understand correctly, please do correct me if I am wrong.

That's correct.

It's not intuitive when you first think about it but you have to treat the GFV for what it is - an offer to purchase the car at a set price. It does not in any way affect the financed amount, as the total credit/finance value is decided by simply subtracting the initial deposit contribution from the total purchase price of the car. The interest is then frontloaded into your monthly payments based of the APR and the length of the agreement, regardless of the GFV amount.

The only way to keep the interest paid the same is to keep your initial deposit at the same level and lower your monthly payments when GFV goes up. However you will still need to find a way of paying that higher GFV at the end of the deal period if you wish to keep the car, and that could mean higher interest re-payments in the future.

EDIT: Higher GFV does protect you from the risk of depreciation, but I don't think anyone considers that likely with the current demand, limited supply and inflation climbing through the roof.

@AndyRC perhaps car finance posts should be split out into their own thread, as I am sure we will see more questions and confusion about it in the future.