Can someone explain pcp gmfv question

baz69

Hi all,I have never done pcp only hire purchase on cars,question is looking at two brands of cars both at €50000

Kia sportage phev

Cupra leon sportstourer

Both are coming back with gmfv of €20000,that's depreciation of 60% in 3 years, which seems a lot to me or am I missing something, I kinda understand the cupra as it's maybe a bit more niche ,would have thought value would be more ,thanks.

Buddy Bubs

The gmfv is your balloon payment if you want to buy the car outright.

The car will be worth whatever the market will pay for it at the time, this is unknown at the moment with any great certainty.

If the value in 3 years is over 20k, you have equity in the car and you can use that equity to put a deposit on your next car. Or you can still buy the current car for 20k. I'd guess that yes, the value will be over 20k in reality but I've no crystal ball.

If the value turns out to be less than 20k, you should hand the car back after 3 years and you have only lost 40k when the depreciation has been more than that.

The gmfv is designed to be at a level where you have equity and will be tempted to buy again in 3 years.

baz69

That's great thanks, I'm in situation of have kia ceed sw phev with about €8k owing on it on 0% hp,in 2020 bought new niro phev fir €33k,needed bigger boot so got ceed in Feb 2022,done well got €31500 on niro and ceed was €33500,but I have done 75000 km and thought while there's still value in car to trade in ,been offered €25000 for my own car ,cupra is on 0% and kia 3.9%, pcp,if I keep ceed for remainder of finance will have 4 year old car with about 120000km,will be doing less travelling going forward, or has been suggested run car till end of finance .would guesstimate it would be worth about 10k in 2026.would possibly be position to pay gmfv in 3 years if I wanted to.whst should I do my fuzzy logic and not great with maths.

Buddy Bubs

If you've been offered 25k you have 17k to put towards your next car.

PCP deposits are max 30% so you could theoretically put 15k towards a 50k car on PCP.

If you put 15k in and gmfv is 20k, your payments are 15000 over 36 months which is about 420 at 0%. They will write you a cheque for 2k, which you could use to cover your first few monthlies or towards the balloon payment if you want to buy it outright in 3 years.

You can also put in less deposit, say 5k and they'll write you a cheque for 12k but your monthlies will be higher. Again, the 12k could be put towards paying monthlies or buying it out. Monthlies here will be about 700.

Gmfv will be the same no matter what deposit you put in.

At 0% I'd put in the smaller deposit and pocket some cash and use it for the payments or at least have it for other options and expenses life throws at us.

At 3.9% it's less clear cut. The higher the deposit the less you'll pay overall.

I can't tell you whether to buy a new car or keep what you have, that's up to you. Keeping older car which still has a nice warranty on it will be cheaper of course but money is there to be spent on things you need first and like second!

zg3409

Beware most Pcp have annual mileage limits so the actual value at the end will also be impacted by mileage. Often the default option is very low and you go above this the penalties may be high especially if you are unaware until the last day. They also take into account damage, dents, scratches, seat wear etc. It's buyer beware and you don't really own your car and the end may be a very different offer than you expected.