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PCP calculation - need explanation

  • 02-07-2019 3:14pm
    #1
    tobehonestwithy
    Registered Users, Registered Users 2 Posts: 83 ✭✭


    So, looking at a new car at the moment due to a couple of additions to the family.

    Before any negotiating, the price of the car is

    €34,500
    -€10,250 (Trade-In)
    €24,250

    GMFV €11,494

    so, to pay €12,756 via finance.

    When putting this in one of those online calculators, it is giving me a monthly payment of €381 @4.9%


    The dealer has quoted €423


    I can only assume that the dealer calculates the finance off €24,250

    Maybe that's correct, I just have no idea how this works tbh


Comments

  • #2
    MarkN
    Registered Users, Registered Users 2 Posts: 4,323 ✭✭✭MarkN


    tobehonestwithy wrote: »
    So, looking at a new car at the moment due to a couple of additions to the family.

    Before any negotiating, the price of the car is

    €34,500
    -€10,250 (Trade-In)
    €24,250

    GMFV €11,494

    so, to pay €12,756 via finance.

    When putting this in one of those online calculators, it is giving me a monthly payment of €381 @4.9%


    The dealer has quoted €423


    I can only assume that the dealer calculates the finance off €24,250

    Maybe that's correct, I just have no idea how this works tbh

    Interest is on the 24,250.


  • #3
    smurfsturf
    Registered Users, Registered Users 2 Posts: 36 ✭smurfsturf


    The GMFV should be included in the calculation of the monthly repayment.

    If the online calculator you are using has a 'Future value' or similarly named field then enter the GMFV value of €11,494 in there.

    Alternatively if you are familiar with Microsoft Excel you could use the PMT function to work out the repayment value. So if we take the input from your example the inputs will be =PMT(0.049/12, 36, -24250, 11494, 1)
    The pmt result of €426.93 you get is slightly more than the amount conveyed by the dealer. Without seeing the quote it is hard to second guess the assumptions used in their calculation which could account for this difference, but it is close enough.

    I hope that helps.


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