Defined
What Is Optional Final Payment?
The optional final payment is another name for the PCP balloon — the lump sum you pay only if you want to keep the car. It equals the car's Guaranteed Minimum Future Value (GMFV).
Optional final payment is the term many lenders use on a PCP agreement for the balloon. The word 'optional' is the key: you pay it only if you choose to own the car at the end of the deal.
How the optional final payment works
The optional final payment is deferred to the end of the PCP, which keeps your monthly payments low — you settle it only to keep the car. It's the same figure as the GMFV.
If you'd rather not pay it, you can hand the car back within the mileage and condition terms and owe nothing more, or part-exchange any equity above it into a new deal. It's just a different label for the balloon payment.
A worked example
On a £20,000 car with a £8,000 optional final payment, the monthly is about £314, and paying that £8,000 at the end takes the total to own to around £25,086.
Worked example
Frequently asked
What is the optional final payment on PCP?
Is the optional final payment the same as the balloon?
Do I have to make the optional final payment?
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