The right Car Price when buying a new or used vehicle

Car price is the actual price or the cash value of the car without any additions or deductions. Some dealers may also refer to car price as cash price or on-the-road price.

Car price in detail

If you are considering buying a car under PCP, your monthly PCP payment is calculated your total to be repaid. This amount takes into account several factors such as administration fee, cash deposit, interest rate, GMFV. Your car price is the basic purchase price without any of these additions or deductions.

Example 1:

You want to purchase a Volkswagen Golf. The dealer gives you a price of £24,080. However, he may add an admin fee of £200, and ask for a deposit of £1,000. In a deal like this, your monthly PCP payment will be calculated on the amount of £23,280 (£24,080+£200-£1,000). However, your car price is £24,080, which is the first price given by the dealer.

How is the car price relevant to PCP finance?

As seen above, the car price is not the actual amount used for calculating monthly PCP payments. There may be several additions and deductions to this amount. This is one of the most-significant metrics and all other calculations revolve around this figure. While shopping around for deals, you should look at the lowest car price as a starting point. But, you should also note that a low car price is not the final word. Other factors involved such as interest rate, GMFV, administration fee, can have an effect on how much you end up paying in total.

Example 2:

Suppose you are taking quotes from different dealers for a new Nissan Juke Hatchback.

  • Dealer A has offered you a car price of £15,360. The interest rate is 9.2%; loan term is 48 months, and GMFV is £6,050. Deposit is £1,000 and admin fee is £250. With these terms, your monthly PCP payment is £213.83, and your total amount borrowed will turn out to be £10,263.
  • Dealer B has quoted a lower price of £15,050. However, the administration fee is £350, interest rate is £9.5%, and GMFV is lower at £5500. Deposit amount and loan term are the same. In this deal, even with a lower car price, your monthly PCP payment is higher at £223.60, and your total amount borrowed will also be higher at £10,732.

These are sample illustrations. You can use our PCP finance calculator to check how the car price can affect the overall finances of the deal in relation to other factors.

iCalculator tip:

Dealers may offer a cheaper car price yet find other means to earn a profit such as a higher administration fee. Make sure to confirm the actual car price offered is free of any hidden charges.