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PCP Example / help!

  • 11-08-2021 2:54pm
    Registered Users Posts: 987 ✭✭✭ BlazingSaddler

    Hi all, thinking of moving to an EV but it’s a bit pricier than what I’d normally pay (usually credit union or bank loan for 4 years when buying a nearly new car) Anyway I have been offered a reasonable part x for my car (€11,000) which will be the deposit. The new car price is €36,000. PCP monthly payment €330. GMFV €16,800. I’m told the likely actual value would be approx €22,000. Now excuse my ignorance as I haven’t used PCP before but does this now mean that at month 37 if that actual value is correct then €22,000 less €16,800 = €5,200. Does this mean that if I now change the car for another new one I only have €5,200 for a deposit, hence meaning a much bigger monthly payment if I get a new car of equal value? Apologies all and thanks in advance!


  • Registered Users Posts: 50,123 ✭✭✭✭ bazz26

    Yes if you are putting in 11k now as a deposit then in 3 years time if you are only putting in 5,200 (your equity in the car) to go again then the monthly payments will increase. You could always add cash to that 5,200 to bring the deposit up to 11k to retain similar monthly payments as before. But the price of the car is still the price of the car and PCP is only a structure of paying for it.

    One thing to note is that the price of the new car could increase also in 3 years time. New cars are alot more expensive now than they were 3 years ago for example so you need to be prepared for that.

  • Registered Users Posts: 1,734 ✭✭✭ Buddy Bubs

    In this case the cost of the car to you will be 11000 +(36×330)-5200 which is 17,680 or 490 a month. You can see how many people get caught with the headline figures.

    It's absorbing 50% of your deposit in the example you give above. However, the market price of 2nd hand cars is a lottery. A few years ago around 2016 or 2017 2nd hand prices were low because of brexit devaluing the GBP and imports being cheap. Now it's the polar opposite, supply restricted and prices very high. So you could have 5000 equity or you could have more than double that. You could also very possibly have zero equity, who knows??

  • Registered Users Posts: 3,028 ✭✭✭ Lantus

    Don't forget that the dealers profit needs to be factored in as well so you won't get all the equity.

    If you are stretching for an ev beyond your normal budget you probably need to base it on a longer term of ownership and factor in fuel savings over say 7 or more years or whatever to make it add up for you.