New-car financing option picks up speed in SA
Factor in depreciation and avoid the dangers of a balloon payment greater than the value of your vehicle
Vehicle financing that caters for the depreciation of your car is gaining popularity as consumers seek more affordable monthly repayments that avoid a balloon payment that could exceed the value of the car at the end of the contract. The newest type of finance is Guaranteed Future Value, also known as GFV or any number of brand-specific titles, which is becoming an increasingly popular form of vehicle finance in SA, says Wesbank executive head of motor Ghana Msibi. He says a vehicle begins depreciating (losing monetary value) the moment it leaves the showroom floor. In line with this depreciation, a GFV plan calculates the future monetary value of a vehicle considering certain criteria such as vehicle condition, mileage and maintenance are met. This future value is guaranteed at the start of the agreement. Alex Parker, manager of business communications at BMW Group, says unlike traditional vehicle financing, with GFV-based products you do not carry the risk of depreciation-related ...
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