The finance option that guarantees your car will still be worth something when you trade it in

South African car buyers are increasingly considering long-term and residual car values when making purchasing decisions, making finance agreements like Guaranteed Future Value (GFV) a viable option.

This is highlighted by TransUnion’s Q1 2026 Mobility Insights Report, which found that residual values are becoming an increasingly important component of vehicle affordability.

The credit reporting agency noted that with financing terms extending beyond six years for many buyers, depreciation and resale performance now play an important role in ownership economics.

The shift towards longer financing terms reflects a growing focus on monthly affordability and cash-flow flexibility, but this trend also increases exposure to residual value risk.

As a result, consumers may face refinancing pressure or negative equity at trade-in when vehicle values underperform expectations.

One way buyers can protect their car’s long-term trade-in value is through GFV finance agreements, which can be offered by the vehicle’s Original Equipment Manufacturer (OEM) or finance houses.

By using the Guaranteed Future Value solution, buyers can ensure that their car’s value at the end of their contract is locked in.

WesBank explains that if the future value agreement covers 60% of the car’s price, you pay towards the remaining 40%, which makes your monthly payments much more reasonable.

“To keep that guaranteed value, the car needs to be in top shape when you return it,” the finance house explains.

“This means you’re only allowed a certain mileage per year, and the car needs to meet the fair wear and tear condition.”

These requirements are in place because GFV agreements are signed on new cars and not for longer than 48 months, whereas traditional car loans can stretch to 7 or more years.

To ensure that vehicles retain their value, institutions place restrictions on drivers, including monthly or annual mileage and the amount of “acceptable” wear and tear.

As with any finance agreement, deposits are optional, while motorists can also pay the vehicle’s outstanding value at the end of their loan term to take ownership of their vehicle.

If not, other options at the end of the loan term include trading in the vehicle and starting a new GFV contract with a new car, or handing the vehicle back, no strings attached.

No matter the choice, GFV agreements guarantee vehicles retain their value throughout the loan term and keep motorists driving cars that are never older than three or four years.

Making use of Guaranteed Future Value

To illustrate how Guaranteed Future Value agreements work, TopAuto used Toyota’s FutureDrive Vehicle Finance Calculator to see what finance on an entry-level Corolla Cross would look like.

The popular crossover SUV has a starting price of R424,900, which can be financed at a minimum of 11.75% over 36 or 48 months, with longer terms offering lower monthly instalments.

Choosing the longer term, no deposit and a 20,000km per year driving limit, financing the Corolla Cross will cost R6,671 per month.

This amounts to a total of R320,223 in monthly instalments, and a guaranteed future value of R276,185, or 65% of the vehicle’s original value.

Using traditional financing through a finance house, the same vehicle will cost R9,228 per month over five years, at the prime lending rate and with no deposit or balloon.

At the end of this term, buyers will pay an additional R123,415 in interest repayments for a total cost of credit of R553,663, resulting in negative equity, as buyers spend more on the vehicle than it is worth.

Those who wish to make use of GFV to finance the Corolla Cross for only 36 months and drive up to 35,000km per year can expect to pay Toyota R8,289 per month.

At the end of the agreement, the instalments will total R298,409, while the crossover retains R250,691, or 59% of its original value.

This value can be paid or refinanced at the end of the loan term to take ownership of the vehicle. Additionally, the vehicle can be returned to finalise the agreement or traded in.