agility finance

[Tooks]

I am rather confused about the end of my agility agreement. I have read posts which say that if the car is valued at less than the GFV set at the beginning of the agreement, then Mercedes finance makes up the shortfall. My Car was valued at £9444. It has a GFV in the agreement of £10150. I have £11444 outstanding on agility plan so dealer says I have £2000 negative equity I have to pay off. deposit on a new car would be in additions this. Is this correct? Any advice appreciated!

 

[Pappilo]

Your dealer is trying it on. You owe them
£11,440 less £10,150 plus any charges you may incur for terminating contract early.

If the car is valued at £1, thats none of your business.

 

[Rory]

You say the end of you Agility agreement but I assume you're trying to end it early - otherwise there shouldn't be anything outstanding?

If so (and not a lot of people know this) the GFV is irrelevant - it only applies when the agreement has run its full term.

 

[gizze]

At the end of the term.

If you owe £11444 you are obviously not at the end of the term??

What you are doing is getting a settlement figure now, based on what you have paid so far.

You must be getting pretty close to the end which is probably confusing you.
If you were 3 months in and still owed £20,000 it would probably make more sense.


However, one thing, as soon as you have paid back 50% of the finance, you can throw the keys back at them.

So, you walk away with nothing, but you know you are going to do that anyway, as you already have a car worth less than the GFV anyway.

You could do a deal on the new car and then advertise yours privately, but doubt you will get more than £11444 if you have only been offered £9444 trade in anyway.

Sp order the new one and ask Mercedes finance to come and collect this the day you pick the new one up.

 

[Tooks]

I have 3 months left on the agreement but I went to see the dealer to discuss possible options. I can let the agreement continue to the end but he did not suggest there was any advantage in that. Shouldn't there be something in the paperwork which confirms that I don't owe anything beyond the GFV of the car?

 

[gizze]

If it is 'Agility' and their is a 'Guaranteed Final Value' that is it.

But regardless of that, you can just throw the keys back at them now, it is your statutory right.


Is this at a Merc dealership?
Have you shown them your agreement?

You sure you have not just said "I have finance on the car.' and they have then got a settlement. I take it you have explained you have it on agility with a GFV at the end?
If not how does he know anything other than you owe £11444?

Just ring Mercedes finance tomorrow and say you want to hand the keys back and walk away as you have paid over 50% of the loan.
I take it you have paid over 50%?
Did you borrow more than £22888??

 

[chris1200]

My understanding about the "hand it back early" option is as follows:

If you borrow, for example, £20000 over a 4 year period then the total amount payable over the term, based on 5% interest, will be somewhere in the region of £24000. Once you have paid £12000 of this deal then you can hand it back without repercussions. So in brief, you must have paid 50% of the total amount payable including interest and NOT just 50% of what you originally borrowed.

 

[MBDevotee]

It does have repercussions though - it will knock your credit rating to do a "throw the keys back" type termination as it shows as an early termination rather than settlement.

Better to wait the 3 months then give them the keys back... perfectly ok then.

 

[gizze]

Yeah it will flag, but not if you speak to them and say, can you take it back early, say you don't want more than the GFV, just say you want to hand it in early.

 

[gizze]

My understanding about the "hand it back early" option is as follows:

If you borrow, for example, £20000 over a 4 year period then the total amount payable over the term, based on 5% interest, will be somewhere in the region of £24000. Once you have paid £12000 of this deal then you can hand it back without repercussions. So in brief, you must have paid 50% of the total amount payable including interest and NOT just 50% of what you originally borrowed.

No, well, sort of.

If you borrow £20000 you have to have paid back £10000, however, interest on an apr agreement is charged on the amount outstanding at the end of each month, so by the time you have got to 50% you will have paid around £24000 including interest.
The saving grace is that normally they set the GFV at around 35-40%, so with only 3 months left you will be over the 50% period.

 

[Tooks]

thanks for all the comments. just to be clear. I have an agility agreement. it runs for 36 months. I have 3 months left. I don't want to end the agreement early. I went to the merc dealer where I got the car. He valued it on that day and gave me the figure £9444. my agreement says " your agreement includes an optional purchase payment of £10150 which is equal to the guaranteed future value of the vehicle". total credit was £19305. dealer says I have £11444 left to pay hence £2000 negative equity. But from what I understand from the posts, that is irrelevant if I complete the 36 month term. I should not owe anything further because of the GFV price given. is that correct? Surely the dealer has a legal obligation to tell me that? thanks again - all advice very helpful.

 

[orb the Impaler]

The way I understand it is that the very WORST you can do (assuming that you complete the lease term, you're not overmiles and the car is in good nick) is give the car back and walk away (ie. car valued at GFV or less). Now hopefully if you do ok the dealer MIGHT value it at a bit more than GFV which gives you a bit toward the deposit on the next one, if you are going down that route.

If that's not the way it works then I'm in for a ****** big shock in May when my SLK goes back, not least because I want another.

 

[gizze]

thanks for all the comments. just to be clear. I have an agility agreement. it runs for 36 months. I have 3 months left. I don't want to end the agreement early. I went to the merc dealer where I got the car. He valued it on that day and gave me the figure £9444. my agreement says " your agreement includes an optional purchase payment of £10150 which is equal to the guaranteed future value of the vehicle". total credit was £19305. dealer says I have £11444 left to pay hence £2000 negative equity. But from what I understand from the posts, that is irrelevant if I complete the 36 month term. I should not owe anything further because of the GFV price given. is that correct? Surely the dealer has a legal obligation to tell me that? thanks again - all advice very helpful.

You could call the finance house and say...


I have three months left on my agreement, I was wondering if I can hand the car back now, no penalties, no early termination records against my credit, just hand it back at 33 months old instead of 36 months old and will 3 months less mileage?



I think they would be pretty amicable as they are better off.

You then start fresh on the new car. Just make sure any scuffed alloys, scratches etc. are sorted before you hand it back, you don't want a £500 bill from them.

You will also miss the 3rd service, which will probably show on your OBC if you get to month 35. That may save you £3-600.


The dealer can't say anything to you other than what the facts are now, he can only see what is outstanding on your finance, all he will see is the £11444, the finance house do not go into details beyond that with him, so he can only work on the cost to settle the agreement and start a new agreement, nothing more.

 

[gizze]

Now hopefully if you do ok the dealer MIGHT value it at a bit more than GFV which gives you a bit toward the deposit on the next one, if you are going down that route.

He is not going to do OK.
He is already £1000 short, and they are loosing around £250 a month in depreciation, so will be about £1750 short at the end, so walking away and taking the GFV is the way to go.

Also, if you finish the agreement early they don't tend to look at the mileage, many get out a couple of months before the end and the mileage then gets overlooked for some reason, beats paying mercedes 9p for every mile you have gone over and may save you more than the 3 months worth of rentals you are loosing out on.

 

[JonnyFitz]

I was in a similar situation recently;
3 months left on Agility. Car trade in £18000 but owed £19200 The dealer agreed to take my car and settle the finance as I was buying another car from them.
As has been already stated you can keep the car until the end of the agreement and walk away owing nothing (assuming no dents, scuffs, scratches etc) or part ex for another vehicle with the aim of the dealer taking the car as it is and paying off the remaining finance. In my opinion this is a better option than simply handing back now.

 

[gizze]

Don't do it all through the dealer, speak to the finance company, if you do it through the dealer they simply take the discount they have to play with and pay off your negative equity with it, best to get the finance company to agree to take it back early and that will leave you more negotiating room on the new car.


It isn't rocket science this, but then I usually end 3 agreements a year as I do all the financing in my company so maybe I am just used to it?

 

[Tooks]

thanks. I am sure you are right and it is not rocket science, but this is the first time I have been in this situation, so apologies if I am missing the obvious!

why is it better to end the agreement early?

do I still get the GFV of the car if I do (and therefore no 'negative equity' of £2000 to pay?)

 

[JonnyFitz]

thanks. I am sure you are right and it is not rocket science, but this is the first time I have been in this situation, so apologies if I am missing the obvious!

why is it better to end the agreement early?

do I still get the GFV of the car if I do (and therefore no 'negative equity' of £2000 to pay?)

Are you potentially looking to end the agreement early to get another new vehicle?

 

[Rory]

But from what I understand from the posts, that is irrelevant if I complete the 36 month term. I should not owe anything further because of the GFV price given. is that correct?

Correct.

 

[Rory]

Also, if you finish the agreement early they don't tend to look at the mileage, many get out a couple of months before the end and the mileage then gets overlooked for some reason,

The idea of the voluntary termination laws is that consumer can walk away with a clean break, so the supplier can't charge extra for mileage and fair wear and tear. The wear and tear bit could be useful, as the Consumer Credit Act's intrepretation of fair wear and tear is likely to be a lot less stringent that MB's!