PCP equity calculator
- See if you're in positive or negative equity
- Work out your deposit towards the next car
- Enter your settlement figure, or estimate it
- Understand why early PCP years run negative
- No sign-up required
Check your PCP equity
Enter what your car is worth today and your finance settlement figure. You'll see whether you're in positive or negative equity, and how much you'd have as a deposit towards your next car. If you don't have a settlement figure yet, estimate one with the fields below, or use the full settlement calculator.
| Car value now | £19,000 |
| Less settlement figure | −£17,893 |
| Your equity | £1,107 |
Figures are illustrative only and not financial advice. Car values change constantly and depend on mileage and condition. For your rights on car finance, see the FCA guide to car finance.
Sources
- FCA car finance and PCP fca.org.uk
- Consumer Credit (Early Settlement) Regulations 2004 legislation.gov.uk
- MoneyHelper buying and running a car moneyhelper.org.uk
What PCP equity means
Equity is the gap between what your car is worth and what you still owe on it. On a PCP, "what you owe" is the settlement figure: the one-off amount that clears the finance, including the balloon. Take the car's value, subtract the settlement figure, and the answer is your equity. A positive number means you're in profit. A negative number means you owe more than the car is worth.
This matters most at two moments: when you want to change cars before the deal ends, and at the end of the term when you decide whether to hand the car back, pay the balloon, or trade in. Positive equity gives you options. It becomes the deposit on your next car, or cash in your pocket if you sell privately and settle the finance yourself.
A worked example
Say your car is worth £19,000 today and your settlement figure is £17,893. Your equity is £1,107, and you're in positive territory. Walk into a dealer, agree a part-exchange, and that £1,107 comes off the deposit on your next car. Now flip it: if the same car were only worth £16,000 against that £17,893 settlement, you'd be £1,893 in negative equity. To change cars you'd need to find that £1,893 from somewhere, or the dealer might roll it into your next finance agreement, which just moves the problem forward and usually makes it bigger.
| Scenario | Car value | Settlement | Equity |
|---|---|---|---|
| Positive | £19,000 | £17,893 | £1,107 in profit |
| Break-even | £17,893 | £17,893 | £0 |
| Negative | £16,000 | £17,893 | −£1,893 shortfall |
Why PCP deals often start in negative equity
New cars lose value fastest in the first year, often 15% to 35% the moment they leave the forecourt and through the first 12 months. Your finance balance, though, comes down gradually. So for the first year or two the car can be worth less than you owe, even if you're paying on time. That's normal, and it's one reason a PCP with a sensible balloon can protect you: the guaranteed minimum future value sets a floor, so you can always hand the car back at the end and walk away rather than absorb the loss.
Equity usually turns positive later in the deal, as depreciation slows and the balance keeps falling. Whether you end up ahead depends on the car, the mileage, the deposit you put down, and how the used market is behaving when you come to change. Our depreciation calculator shows how fast a given car is likely to lose value, which is the other half of the equity picture.
Using equity to change your car
If you're in positive equity and itching to change, you don't have to wait for the term to end. Ask your lender for a settlement figure, get a couple of valuations, and take the difference to a dealer as your deposit. If you're in negative equity, the honest move is usually to hold on until the numbers improve, unless there's a strong reason to change now. Rolling negative equity into a new deal is how people end up owing far more than their car is worth. The MoneyHelper guide on running a car is a good neutral read before you commit.