Car Finance Calculator (PCP & HP)

Use the car finance calculator above

Enter the car's cash price, your deposit (including any part-exchange value), the APR the lender has quoted, and the length of the agreement in months. If it's a PCP deal, add the balloon payment - the lump sum due at the end. The car finance calculator returns your estimated monthly payment, the total interest you'll pay, and the total amount repayable.

PCP vs HP explained

The two main ways to finance a car in the UK are Personal Contract Purchase (PCP) and Hire Purchase (HP). They sound similar and both spread the cost over monthly payments, but they behave very differently - and that difference is the whole reason a vehicle-specific calculator beats a plain loan tool.

Hire Purchase (HP) is the straightforward one. You pay a deposit, then equal monthly payments that clear the entire balance plus interest. When the last payment lands, the car is yours. There's no lump sum at the end and nothing left to decide.

Personal Contract Purchase (PCP) defers a big slice of the car's value to the end of the term. That deferred amount is the balloon payment, also called the Guaranteed Future Value or optional final payment. Because you're only financing the difference between the price and that balloon (plus interest on the whole amount), your monthly payments are lower than the equivalent HP deal. At the end you choose one of three things: pay the balloon and keep the car, hand the car back and walk away, or use any equity above the balloon as a deposit on your next car.

Lower monthly payments make PCP look cheaper. They aren't - you're paying interest on the balloon for the whole term and you still don't own the car until you settle it. That's exactly the trap this car finance calculator is meant to expose.

What the calculator works out

From a few inputs, the tool gives you the figures a dealer's brochure tends to bury:

• Amount financed - the car price minus your deposit.
• Monthly payment - the regular sum leaving your account.
• Total interest - the genuine cost of borrowing across the term.
• Total amount payable - deposit, every monthly payment, and any balloon added together.

Seeing the total payable next to the cash price is the moment most people pause. A tempting monthly figure can hide thousands of pounds of interest once you total it up over four or five years.

How the car finance calculator works

Car finance is a reducing-balance loan, so the maths is the same engine behind a mortgage or personal loan. Interest is charged on the outstanding balance, the balance falls as you pay, and the monthly figure is set so the loan clears over the agreed term (with PCP, it clears down to the balloon rather than to zero).

In plain words:

• Amount financed = car price − deposit
• Monthly payment is the level amount that repays the financed amount, plus interest, over the term - leaving the balloon outstanding at the end on a PCP.
• Total cost of borrowing = (monthly payment × number of months) + balloon + deposit − car price

The monthly payment itself comes from the standard amortising-loan formula. Using r as the monthly interest rate (the annual rate divided by 12) and n as the number of months, the payment on a balance P with no balloon is:

payment = P × r ÷ (1 − (1 + r)−n)

When there's a balloon B, the present value of that balloon is subtracted from the amount the monthly payments need to cover, which is why PCP payments are lower. APR matters here too: the advertised APR includes most compulsory fees, so it's a fairer comparison between deals than a headline "flat rate". Always compare APRs, not monthly prices.

Worked example: a PCP deal on a used family car

Take Priya, who's buying a two-year-old estate to fit the kids and the dog. The cash price is £18,000. She puts down a £2,000 deposit, the dealer quotes 9.9% APR, the term is 48 months, and the balloon (final) payment is £6,500.

• Amount financed = £18,000 − £2,000 = £16,000
• On those figures the monthly payment works out at roughly £268.
• Total of monthly payments = £268 × 48 ≈ £12,864
• Total paid if she keeps the car = deposit £2,000 + payments £12,864 + balloon £6,500 = £21,364
• Cost of borrowing = £21,364 − £18,000 = roughly £3,364 in interest over four years.

Now compare the same car on HP - no balloon, so the monthly payments clear the full £16,000 plus interest. The monthly figure jumps to around £405, but Priya owns the car outright after the final payment with nothing left to settle. PCP feels lighter month to month; HP is usually cheaper overall and ends with you actually owning the car. The right choice depends on whether she wants to keep the car or swap it every few years.

Worked example: straightforward HP on a new car

Tom is buying his first new car at £24,000 on Hire Purchase. He pays a £3,000 deposit, the APR is 7.9%, and the term is 60 months with no balloon.

• Amount financed = £24,000 − £3,000 = £21,000
• Monthly payment ≈ £424
• Total of payments = £424 × 60 ≈ £25,440
• Total paid = £3,000 + £25,440 = £28,440
• Cost of borrowing ≈ £4,440 across five years.

Stretching the term from 48 to 60 months drops the monthly payment but adds interest, because you owe the money for longer. That trade-off - lower monthly versus higher total - is the single most useful thing to test in the calculator before you sign.

The balloon (final) payment

The balloon is the part of PCP that catches people out. It's set at the start based on the car's predicted value at the end of the agreement (the Guaranteed Future Value). Three points worth holding onto:

• You pay interest on the balloon for the entire term, even though you don't settle it until the end.
• If the car is worth more than the balloon at the end, that difference is equity you can put towards your next car. If it's worth less, you simply hand it back and the lender carries the loss - that's the protection PCP buys you.
• Mileage and condition matter. Go over the agreed annual mileage or return the car damaged and you'll face excess charges that don't show up anywhere in the monthly figure.

Deposit and part-exchange

Your deposit can be cash, the value of a car you're trading in, a dealer contribution, or a mix. A bigger deposit cuts the amount financed, which lowers both the monthly payment and the total interest. If you're part-exchanging, get the trade-in value confirmed in writing and treat it as deposit in the calculator. Be wary of a generous part-exchange figure paired with a high APR - the headline can give on one hand and take on the other.

Settling car finance early

You're allowed to settle regulated car finance early. Under the Consumer Credit Act you can ask the lender for a settlement figure, and there's usually a rebate of some future interest, so the figure is less than simply adding up the remaining payments. Some agreements apply a small early-settlement interest charge (commonly up to about one to two months' interest), so always request the exact figure rather than estimating. If you're tempted to clear it with savings or another loan, run the numbers in an early repayment calculator first to check the saving is real after any charge.

Things to watch before you sign

• Compare APR, not monthly payments. A lower monthly figure often just means a longer term or a bigger balloon - more interest, not less.
• Check the total amount payable. It's printed on every regulated agreement. That single number tells you the true price of the car on finance.
• Mind the mileage limit on PCP. Excess-mileage charges are easy to underestimate and aren't part of the quoted monthly cost.
• Watch 0% deals. Genuine 0% APR finance exists, but it's sometimes offset by a higher cash price or a lost discount you'd have got paying outright. Compare the on-the-road price both ways.
• Factor in the running costs. Insurance, road tax, servicing and fuel sit on top of the finance. A quick check with a fuel cost calculator keeps the monthly reality honest.

Common mistakes

A few errors come up again and again with UK car buyers:

• Judging affordability by the monthly figure alone. Two deals with the same monthly cost can differ by thousands once you add the balloon and total the interest.
• Forgetting the balloon is still your debt. On PCP you don't own the car until the final payment is made or refinanced. Until then it's the lender's.
• Confusing flat rate with APR. A "5% flat rate" can equate to an APR roughly double that, because flat rates ignore the falling balance. The APR is the figure to trust.
• Assuming finance is always best. For some buyers a personal loan is cheaper and means you own the car from day one, with no mileage limits. It's worth comparing a personal loan against the dealer's quote.
• Over-valuing a part-exchange. A flattering trade-in figure can mask a weak APR or an inflated car price. Look at the total payable, not the trade-in number.

PCP, HP or a personal loan?

There's no single right answer. PCP suits people who want a newer car every three or four years and lower monthly payments, and who are comfortable not owning the car unless they pay the balloon. HP suits people who want to own the car at the end and don't mind paying more each month to get there. A personal loan can beat both if your credit is good and you want full ownership and no mileage limits from the start. The honest move is to price all three and compare the total cost of borrowing, not the monthly headline. For a general view of any fixed repayment, a loan calculator shows the same amortising maths applied to any borrowing.

For impartial, non-commercial guidance on the different agreement types, the Money and Pensions Service runs a clear explainer at MoneyHelper.

These figures are estimates for guidance only and are not personal financial advice. Your actual rate, payments and settlement figure depend on the lender's offer and a credit check - always read the agreement before you sign.

Who should use this calculator

This is for vehicle borrowing specifically — a Hire Purchase agreement or a personal loan used to buy a car. It shows the monthly payment and, importantly, the total interest across the term, which is the figure dealerships present least clearly.

It does not model PCP, and that distinction matters. A Personal Contract Purchase has a large optional final payment based on the car’s predicted future value, so the monthly figure looks far lower than HP for the same car while you own nothing until you pay the balloon. Comparing a PCP monthly payment against an HP monthly payment is not a like-for-like comparison.

What this calculator assumes

• A fixed-rate agreement with equal monthly payments across the full term, as Hire Purchase and personal loans are structured.
• The amount entered is what you are financing — the price less any deposit or part-exchange.
• Interest is charged on the reducing balance.
• Ownership passes to you at the end, which is how HP works and what distinguishes it from leasing.

Limitations — what it does not cover

• PCP balloon payments, and the fact that most PCP drivers never own the car.
• Personal Contract Hire and leasing, where you return the vehicle and mileage limits apply.
• Fees — documentation, option-to-purchase and early-settlement charges.
• Negative equity, where the balance outstanding exceeds the car’s value, which is common early in a term.
• Running costs: insurance, VED, servicing, tyres and depreciation, which usually exceed the interest.
• Voluntary termination rights under the Consumer Credit Act once half the total payable has been paid.

Related calculators

Pricing a car is rarely just the finance. These tools help with the rest of the decision:

• Personal Loan Calculator - compare buying the car with a loan instead of dealer finance.
• Loan Calculator - see the monthly cost and interest on any fixed-rate borrowing.
• Early Repayment Calculator - check what you'd save by settling finance ahead of time.
• Fuel Cost Calculator - work the running costs into your monthly budget.

Insurance is a big running cost too: the car's insurance group (1 to 50) has a major effect on your premium.

The numbers: what a £10,000 loan really costs

Monthly repayments and the total cost of borrowing £10,000 at typical UK personal loan APRs. Scale to your amount.

Lenders must show the APR including fees. Free debt and borrowing guidance: MoneyHelper.