Who wins or loses in a PCP contract?

In a PCP contract, who gains or loses if the end of contract value of the car is less than the GMFV?

FRANK DODD (DUBLIN)

Dec 2017 Filed under: finance

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Expert answer

Hi Frank,

Nobody. Technically, you win as the dealer (or the dealer’s bank, or sometimes the manufacturer — it varies from make to make) has guaranteed the value of the car, so they still have to honour that even if the actual resale value is lower. That means that if you’re just handing the car back, you’re the winner.

However, if you’re planning to pay the balance and keep the car, you lose, as you’re now paying above market value for the car. You also lose if you’re planning to roll the car over into a new deal, as the fall in its value will reduce, possibly entirely wipe out, any equity left above the GFMV to act as a deposit for the next car.

Neil Briscoe - Complete Car Advisor
@neilmbriscoe