The Balloon Payment for PCP is agreed by the lender at the start of your agreement, based on the vehicle’s estimated Residual Value (RV); the amount your vehicle is worth at the end of your contract. Sometimes referred to as the Guaranteed Future Value (GFV), the residual value is calculated based on the Depreciation of the vehicle over the length of your contract, taking into account the vehicle’s age, condition and your agreed Annual Mileage. If at the end of your agreement, the vehicle is worth more than the estimated residual value, you can use the equity as a deposit towards your next vehicle.