Car Finance Calculator: PCP and HP
On a £25,000 car with a £3,000 deposit over 48 months at 8.9% representative APR, PCP with an £8,000 balloon costs about £407 a month and £30,539 in total if you buy the car. HP on the same figures is about £546 a month and £29,239 overall. Use this calculator to compare PCP and HP before you sign.
Calculation method: Amortised loan repayment formula. This tool runs a model on the figures you enter, so there is no official rate table behind the result.
Calculator
The price of the car before finance, often the list or agreed price.
Cash you pay upfront. Part exchange below is added to this for borrowing calculations.
Optional value of your current car treated as deposit.
The annual rate on the finance quote. Your personal rate may differ.
The optional final payment (GMFV) if you want to own the car at the end.
PCP deals set a mileage limit. This field is for your planning only and does not change the payment estimate.
Estimated monthly payment (PCP)
£407.06
Over 48 months at 8.9% representative APR
Total amount payable (estimate)
£30,538.86
Total cost of credit (estimate)
£5,538.86
Balloon payment (estimate)
£8,000.00
What makes up the total
What this calculation assumes
Monthly payment is the standard annuity formula, P x (r(1+r)^n) / ((1+r)^n - 1), where r is the interest rate you enter divided by twelve and n is the term in months. Interest is charged on the reducing balance each month.
- The interest rate you enter is fixed for the whole term
- Payments are monthly, equal, and made on time
- Fees, insurance and any early repayment charge are excluded unless you enter them
- This is not a quote and no lender's actual pricing is used
- PCP results depend on the balloon payment and the APR you enter; no dealer or lender offer is used
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PCP versus HP
Hire purchase (HP) spreads the full price minus deposit across fixed monthly payments. Once you pay the final instalment and any small option-to-purchase fee, you own the car. Personal contract purchase (PCP) defers part of the value into a balloon payment, so monthly costs are lower, but you only own the car if you pay that balloon at the end.
For a full guide to how PCP and HP work, see our car finance explained guide. If you are buying without dealer finance, compare with the personal loan calculator and our personal loans UK guide on the personal finance hub.
How the payment is calculated
Both modes use the amount borrowed (cash price minus deposit and part exchange) and convert the representative APR to a monthly rate. HP amortises the full borrowed amount over the term. PCP subtracts the present value of the balloon from the amount financed, which lowers the monthly payment because part of the car's value is deferred.
This calculator is for cost estimates only. It is separate from our car finance claim calculator, which helps check whether you may have a mis-selling complaint about commission arrangements, and from our car finance claims guide.
Frequently Asked Questions
With hire purchase (HP) you pay off the full value in instalments and own the car at the end after a small option-to-purchase fee. With a personal contract purchase (PCP) part of the value is deferred into a final balloon payment, so monthly payments are lower, and at the end you can pay the balloon to keep it, hand it back, or part exchange.
You pay interest on the amount borrowed, but the guaranteed final value, the balloon, is deferred to the end. Your monthly payments mainly cover the car's expected depreciation plus interest, which is why they are lower than HP for the same car.
On PCP it is the optional final payment, also called the guaranteed minimum future value, set at the start. It is the amount you pay at the end if you want to own the car. If you hand the car back instead, you do not pay it, as long as you are within the mileage and condition terms.
You have three choices: pay the optional final payment to own the car, return the car and walk away if it is within the agreed mileage and condition, or use any equity above the balloon as a deposit on a new deal.
On HP you own it once the final payment and option-to-purchase fee are made. On PCP you only own it if you pay the balloon at the end. Until then the finance company owns the car, so you cannot sell it without settling the agreement.
PCP deals set an annual mileage limit because it affects the car's future value. If you exceed it, you pay an excess mileage charge per mile at the end. Estimating your real mileage accurately at the start helps you avoid those charges.
A larger deposit lowers the amount borrowed, so it reduces monthly payments and the total interest. It is not always required, and you should still keep enough cash aside, but more deposit generally means a cheaper agreement overall.
Yes. You can ask for a settlement figure to pay off the agreement early. On regulated deals there may be limited interest charges, but settling early usually reduces the total interest. On PCP this is the amount needed to clear the balance including the deferred balloon.
Related Guides
Car Finance Claims: What You Need to Know
What the FCA review covers, how to complain for free, and why you should not pay a claims firm.
Read guideCar Finance Explained: PCP vs HP 2026
How hire purchase and PCP work, balloon payments, mileage limits, and comparing total cost.
Read guidePersonal Loans UK: How They Work in 2026
Unsecured borrowing as an alternative to dealer finance.
Read guideWas this useful?
Sources and method
This calculator has no external rate table behind it. The result comes from the figures you enter and the model described in our methodology.
Method: Amortised loan repayment formula.
Spotted a figure that looks wrong? Report a correction and we will check it against the source above.
Further reading
Background references used while writing this page. The sources behind the calculated figures are listed above.
Disclaimer: This calculator provides estimates based on standard HMRC rates for 2026/27. Results may vary based on individual circumstances. This is not financial advice. Always consult a qualified accountant or CIMA-qualified financial adviser for personal tax matters.