Understand the equity in a car on PCP

Typhoon2000

You could say you want a 20k miles per year PCP. You garanteed future value would be lower, and your mothly payment would hence be higher, but you would save on interest because of more of your payment will be going towards paying the capital. Then come trade in time, if you stick to 7k a year, you will have much more equity saved up for your next car.

=rizla=

EHesp wrote: »

Cheers for clearing that up... can't work out whether to do this or not, 11% APR means half the year I'd be paying back interest... blergh.

11% is quite high nowadays to be fair, the way I understand it the interest is calculated on the GMFV and the monthly payments, so for the whole 4 years you're paying 11% on the £12k, so over £5k of interest on the GMFV alone.


I think pcp's especially with some manufacturers offering 0% can be a good way to buy a new car (well at least drive one for a while).