What happens on PCP if my car is worth less?
Can I apply to get a car on PCP if I owe more than my car is worth on trade in value? I.e my car has a trade in value of €13,590 but my settlement is €15,750.
Michael Murphy (Dublin )Feb 2015 Filed under: finance
Expert answer
Hi Michael,
It depends on your dealer and their financial services provider. Generally speaking this shouldn't happen - the Guaranteed Minimum Future Value (GMFV) is usually calculated on a pretty conservative rate, meaning that the car should have sufficient value in it to cover both the final bubble payment and a decent deposit to roll over into a new PCP.
If that hasn't happened, then someone's cocked up somewhere along the line and pegged the GMFV too high. In one sense, you're on a winner - you can hand back the car and let the dealer take the €2k hit on the value, but it does leave you with no asset left to convert into a deposit.
Can I just ask, has this actually happened or are you questioning a hypothetical problem? If it's actually happened then I would suggest that someone, somewhere has made a colossal error - the whole point of a PCP is that you should have equity left in the car to roll the deal over. If not, then I'd break out the original PCP contract and sit down and read the fine print, preferably with a good solicitor at your side. There may be some legal comeback if the dealer cannot fulfil their end of the bargain.
Neil Briscoe - Complete Car Adviser@neilmbriscoe