How PCP Works
PCP divides the car's value into three parts: a deposit, monthly payments covering depreciation over the term, and a Guaranteed Minimum Future Value (GMFV) balloon at the end. You can return the car, pay the balloon and keep it, or use any positive equity as a deposit on the next car.
Key PCP Terms Explained
| Term | Meaning |
|---|
| GMFV | Guaranteed Minimum Future Value - the balloon you'd pay to own the car |
| Excess mileage | Charge per mile over the agreed annual limit (typically 5–10p per mile) |
| Condition charges | Charged if car is returned below agreed condition standard |
| Voluntary termination | Right to hand car back once 50% of total amount payable is settled |
Worked Example: £200,000 Bentley Continental GT - 48-Month PCP
| Parameter | Detail |
|---|
| Vehicle | Bentley Continental GT V8 (2024) |
| OTR Price | £200,000 |
| Deposit (20%) | £40,000 |
| GMFV (40% of OTR) | £80,000 |
| Amount Financed | £80,000 (depreciation element) |
| Term | 48 months |
| APR | 8.5% |
| Monthly Payment | approx. £1,966 |
| Mileage Allowance | 8,000 miles per annum |
