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PCP early settlement rebate calculation help

sgx.saint Posts: 1,615 Forumite
First Post First Anniversary Combo Breaker
Hi Folks.

I am trying to work out the hypothetical early settlement balance for a typical PCP contract.

Take this example from Autotrader. How would I go about calculating the likely settlement balance in 12 months time?

I understand that interest will be rebated and effectively only charged to cover the period that I have borrowed the funds (but adjusted to be based on 56 days from the date of the settlement payment).

I took a stab at working out my capital and interest repayments based on the above but I'm at a loss at how to translate that to an estimated settlement balance in 12 months time.

Car £38,950.00
Deposit £1,000.00
Balloon £21,469.00

Total £16,481.00
Months 48

Monthly capital £343.35

Monthly repayment 521.33

Monthly interest £177.98

Appreciate any help gettiing me over the line!


  • CvPiper
    CvPiper Posts: 193 Forumite
    First Post First Anniversary
    You will pay 1/4 of the charges for 1/4 term so add that to the original balance and then remove monthlies to leave the balance at 12 month point?
  • Car_54
    Car_54 Posts: 8,357 Forumite
    First Anniversary Name Dropper First Post
    OP, interest will be payable on the full amount owing, including the balloon payment.

    I.e. £37,950, not £16,481.
  • Nearlyold
    Nearlyold Posts: 2,312 Forumite
    First Anniversary Name Dropper Combo Breaker First Post
    edited 27 February 2023 at 6:49PM
    Back of a fag packet calculation says after 12 months with your example you'd owe around £34537 plus Early Settlement Fee of  2 months interest approx. £400  - so around £35,000 in total to pay.

    If you use the "Guardian Loan Calculator" enter the total amount borrowed and the APR then play around with the term till the principal outstanding at the point your PCP is due to finish ( ie month 48 in your example) is as close as you can get to the final balloon payment in your PCP quote. Then you can see how much you'll owe at any monthly point and the interest due for the following 2 months.   it's not going to be spot on but it'll be pretty close.
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