PCP Settlement & Equity Calculator

How do I get my PCP settlement figure?

Contact your finance provider and request an up-to-date settlement figure. On an agreement regulated by the Consumer Credit Act 1974 you are entitled to a settlement statement.

• The lender must give you the statement within 7 working days of your request.
• Your lender does not have to provide another settlement statement if it has already complied with a request for the same agreement within the previous month.
• The figure is worked out for a settlement date 28 days after the lender receives your request, unless you ask for a later date.
• It shows the amount before any rebate, the rebate of interest for settling early, any compensation the lender claims, and the total to pay.

That settlement date is the date the law uses to calculate the figure. How long a lender will accept a particular quote is up to the lender, so check before you rely on it, and ask for a new statement if your plans change.

What happens if I have positive equity?

Positive equity means the car is worth more than the settlement figure. If you settle the finance and sell or part-exchange the car at that value, you could have money left over.

• While your PCP agreement remains outstanding, you generally do not own the vehicle outright, so settling the finance has to be part of any sale or part exchange.
• A valuation is not an accepted offer. The amount you actually receive can be lower, for example after an inspection.
• Fees, the costs of selling, and a later settlement date than the one on your statement can all change what is left.

What happens if I have negative equity?

Negative equity means the settlement figure is more than the car is worth. To settle and sell, you would need to pay the shortfall yourself.

• Carry on with the agreement and check again later: the amount you owe falls with each payment, so the gap can close.
• Pay off part of the agreement early. On a regulated agreement you can make a partial early repayment.
• If you are considering returning the car rather than settling the finance, check whether voluntary termination is available and what costs could apply.
• Be careful about adding the shortfall to new finance. You would still be paying for your old car, and you would be borrowing more.

Is settling PCP different from voluntary termination?

Yes. Settling means paying the lender's settlement figure to end the agreement. Once the agreement has been settled and any required purchase or ownership formalities have been completed, you can keep or sell the vehicle. Voluntary termination means giving notice to end the agreement and handing the car back.

With voluntary termination you owe the amount by which half of the total price (the Total Amount Payable) exceeds what you have paid and what is already due, unless your agreement asks for less. You may also have to pay if the car has not been looked after with reasonable care. It applies to regulated hire-purchase and conditional sale agreements, which commonly include PCP. Because the car goes back, any equity in it goes back too.

Neither route is better in every case. Compare the written settlement figure, your valuations and your voluntary termination position before deciding. The PCP Hand-Back Calculator works out the voluntary termination position from your agreement.

Can I use PCP equity towards my next car?

Yes, if there is money left once the finance is settled. You can use it like any other savings towards your next car.

• On a new PCP or hire purchase agreement, it can go towards the deposit.
• On a lease (personal contract hire), it could go towards the initial payment, often called the initial rental. That is part of what you pay for the lease, not a refundable deposit, and you do not own the car at the end.
• If a dealer takes your car in part exchange and settles the finance, ask for the valuation, the settlement figure and the equity in writing, so you can see how the equity is used.
• Negative equity does not go away when you change car. It still has to be paid, either by you before the new deal or as extra borrowing.

What should I check before settling my PCP?

Check the figures, the dates and your other options first.

• Get a settlement statement from your lender and note its settlement date.
• Get more than one valuation, and treat each one as indicative until it is a firm offer.
• Check your agreement and statement for any fees, and for any compensation the lender claims for early repayment.
• If you are near the halfway point of the Total Amount Payable, check your voluntary termination position as well.
• Make sure the finance is settled as part of any sale, and keep written confirmation that the agreement has ended.