# PCP loan calculator



## Ballistic (May 13, 2002)

In attempting to work out an affordable monthly payment for a PCP scheme I'm trying to design a table where I can change the variables to see how it affects the outcome.

In an excel sheet if I input;
amount to borrow
term of PCP
APR%

does anyone know the formula that the finance companies use to calculate the monthly payment + the final balloon payment?

Any help on this much appreciated, then I can just perm the figures.


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## jampott (Sep 6, 2003)

Deja Vu


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## Chip_iTT (Nov 14, 2003)

> In attempting to work out an affordable monthly payment for a PCP scheme I'm trying to design a table where I can change the variables to see how it affects the outcome.
> 
> In an excel sheet if I input;
> amount to borrow
> ...


There is a built in fomula that does this... look at PMT, IPMT, NPV, FPV and other financial formulae... they work for mortgages and stuff so should be poss to make them work for PCP... btw you will need real interest rates not APR... as this includes cost of setup charges etc...


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## Carlos (May 6, 2002)

Ballistic

Firstly, the balloon is calculated according to the type of car for a PCP. Â This is because the balloon is a guaranteed minimum future value - ie you can hand the car back without paying the balloon at the end. Â As different cars depreciate at different rates, the balloon they offer you will depend on the type of car and your annual mileage.

A lease purchase is similar, but it allows you to decide the size of the balloon (within reason). Â However you do have to stump up the cash at the end of the agreement, you can't just hand the car back.

As for calculating payments, I normally worry about the flat rate rather than APR as its easier to calculate the repayments. Â As a simple rule

M = (Ti + Tc)/P

Where m is your monthly payment, Ti is the total intersest charges, Tc is the total capital you are paying off (not inc balloon) and P is the number of months of the agreement.

Ti is calculated as

Ti = R/12*P*A

Where R is the flat rate (eg 0.0425 = 4.25%), P is again the period and A is the total amount borrowed (purchase price - deposit)

and Tc is

Tc = X - D - B

Where X is the purchase price, D is your deposit and B is the balloon.

Simple! Â (note there are other costs such as admin fee etc but I haven't bothered with those).

See the thread below for my thoughts on car finance

http://www.********.co.uk/ttforumbbs/YaBB.pl?board=OffTop;action=display;num=1072792874


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## Ballistic (May 13, 2002)

IrvingTT/Carlos

Many thanks for the information supplied so far, most usefull.
I realise the variables that affect the balloon payment calculation ie; mileage, age etc. and I have been led to believe that companies calculate the GFV as 80/85% of the predicted real value.
Is a lease purchase deal available to a private individual?
I'm looking to borrow around Â£20k to purchase either a 350Z or RX8 (probably RX8 because it's more practical) I anticipate keeping the car for at least 3 years and my annual mileage is around 15K
I'm not a financial expert, so as a private purchase what will be the most cost effective way to fund this over 3 - 5 years?


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