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PCP Question

  • 15-10-2021 9:51am
    #1
    RoboRat
    Registered Users Posts: 2,454 ✭✭✭


    I am thinking of going down the PCP route and I can't seem to find a straight answer regarding what happens at the end when you want to roll over.

    I know you have 3 options but I am getting confused at the roll over part - do I need to pay a fresh deposit or can the GMFV be used as the deposit? For example, I buy a Tuscon @ €34,445 and the GMFV price is €13,103 and I decide to roll over, is that €13,103 used to fund the deposit of the new car, or do I need to top it up... for arguments sake, the retail price of the new car remained at €34,445.

    I know that if I am really careful, the actual value 'may' be higher and the GMFV is what they guarantee it's worth if I keep it within the contractual restrictions. If they valued the car at €14,500 after 3 years, would that would increase the deposit I can put on the new car (and reduce the payments & bubble payment)?

    I'm just confused as I have seen it said a few times that if the market value of the car from the original PCP contract is greater than the GMFV, then you may have equity to put towards a deposit on the new car, and this is throwing me. It's making me think that I need equity (from a value higher than the GMFV) and then top up the deposit to get the new car, and this changes everything.

    Any advice or examples would really be appreciated!



Comments

  • #2
    XsApollo
    Registered Users Posts: 2,390 ✭✭✭XsApollo


    If you owe a 13,000 balloon payment then you owe 13000.

    thats how much you owe at the end of the pcp term.

    its not a deposit for your new car , it’s the debt you owe the finance company.

    if your car is worth 16000 at the end and you trade it in then your 13000 will be cleared and you will have 3000 to put towards the deposit for the next car.



  • #3
    kc78
    Registered Users Posts: 42 ✭kc78


    In your example the amount you have to put toward the new car is €14,500-€13,103. The €13k is whats owed on the old car, so by giving that car back you are deemed to have paid off the pcp.



  • #4
    rgunning
    Registered Users Posts: 219 ✭✭rgunning


    I think you may be confused as to what a GMFV is. If you wish to keep the car, then you must pay this to own the car. If you choose not to pay this value, then you just hand the car back and walk away.

    If the actually value of the car is greater than the GMFV at the end, then the difference between the GMFV and the actual value is your equity for a roll over. So for example, if the actual value of the car is €14,500 and the GMFV was €13,103 then the equity of the roll over is €1,397. This would could be used as a deposit (or likely part of) for you new car.

    Note that there can be a huge amount of flexibility with the GMFV.



  • #5
    Lantus
    Registered Users Posts: 3,027 ✭✭✭Lantus


    As above but just to be clear the gmfv is a chunk of debt you park to pay off later so if you decide to keep the car you make payments on that until it's paid off.


    Just remember that the equity between your gmfv and the market value isn't all yours. The dealer needs to build in their profit on your old car to sell. So if the the market value is 20k and the gmfv 15k you might have 2.5k in equity. This amount will vary by dealer and brand and model and market conditions.



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