How to calculate your outstanding PCP balance

By: John Wilmot
12th March 2018

A graphic of a calculator

A friend of mine was buying a new car recently. Stuck in the PCP rut!

I asked him what they’d offered for his car.

He said they told him there was £2k of negative equity.

“Yeah, but what did they offer for your car?”

“I don’t know, he said”

So you go to buy a new car and the dealer doesn’t even tell you what they’re offering for your car. This happens a lot — they focus on monthly payments and selling you a new one. To the less financially savvy, asking the basis question of “what are you offering on my trade in” is not always done.

However, calculating your finance balance on a month by month basis is incredibly easy.

Here’s how.

Let’s say you bought a £17k car, you pay £300 a month and the APR is 7.7%.

Month 1 = Loan + Interest — payment = £17,000 + (17,000 X 0.077 / 12 months) — £300 = £16,809.08

Month 2 = Month 1 balance + interest — payment = £16,809.08 + (16,809.08 X 0.077 / 12 months) — £300 = £16,616.94

Month 3 = Month 2 balance + interest — payment = £16,616.94 + (16,616.94 X 0.077 / 12 months) — £300 = £16,423.57

…and so on.

Year 1 would look like this on a spreadsheet:

Not as complex as you thought it was, is it? Actually very simple maths.

Most of the time you will have a one month interest penalty to pay off the finance, and sometimes there are other deal variables but this will give you a strong rought idea of what you owe.

So the next time you’re selling your car that’s on a PCP, you have an idea of what you owe and that will put you one step ahead of the game.