PCP or HP: what might the car finance cost?
See an illustrative PCP-style monthly payment and the optional final balloon needed to own the car. Compare with a no-balloon Hire Purchase-style mathematical loan.
PCP / Hire Purchase inputs
PCP-style amortization mathematics only, NOT a legal PCP or Hire Purchase offer. Does not calculate representative APR, mandatory contract fees not included in user-entered financed charges, GMFV, vehicle-return options, mileage, damage, ownership transfer fees, finance default rules or settlement rights. Balloon is optional for ownership, but real contract conditions apply.
Illustration: £25,000 car, £3,000 deposit, £2,000 net part exchange and £9,000 optional final payment over 48 months at a user-checked nominal rate. This is a fictional deal, not a quotation.
Total finance cost if you KEEP the car
Balloon vs ordinary amortising loan
Monthly credit balance illustration
| Month | Interest | Capital paid | Amount still owed |
|---|---|---|---|
| 1 | £125.00 | £197.22 | £19,802.78 |
| 2 | £123.77 | £198.45 | £19,604.33 |
| 3 | £122.53 | £199.69 | £19,404.64 |
| 4 | £121.28 | £200.94 | £19,203.70 |
| 5 | £120.02 | £202.19 | £19,001.51 |
| 6 | £118.76 | £203.46 | £18,798.05 |
| 12 | £111.01 | £211.21 | £17,550.31 |
| 24 | £94.61 | £227.61 | £14,910.45 |
| 36 | £76.94 | £245.27 | £12,065.65 |
| 48 | £57.90 | £264.32 | £9,000.00* |
* Last month's instalment + balloon if purchased: £9,322.22 · Total of monthly payments plus balloon: £24,466.46
How to compare PCP and Hire Purchase on a car
- 01
Enter the vehicle price, cash deposit and net part-exchange allowance after any finance settlement. Enter only charges actually added to the financed balance.
- 02
Use the nominal loan interest rate for the example, not an advertised representative APR with fees. Set an agreement term, usually expressed in months.
- 03
For an HP-style fully repaid loan choose zero balloon. For a PCP-style illustration enter the finance company's proposed Guaranteed Minimum Future Value (GMFV) as the balloon—not a number invented by the calculator.
- 04
Study the monthly payment AND the final instalment-plus-balloon if keeping the vehicle. PCP rights to return the car, mileage limitations, fair wear and tear, fees and actual GMFV conditions are contract-specific and not modelled.
PCP risks and contract terms
PCP-style amortization mathematics only, NOT a legal PCP or Hire Purchase offer. Does not calculate representative APR, mandatory contract fees not included in user-entered financed charges, GMFV, vehicle-return options, mileage, damage, ownership transfer fees, finance default rules or settlement rights. Balloon is optional for ownership, but real contract conditions apply.
Common PCP and car finance questions
Is the PCP balloon always required at the end?
Not necessarily. PCP commonly offers options including paying the optional final payment to own, returning the car subject to conditions, or entering another agreement. This numeric model shows the cost IF you choose to purchase.
Does this estimate excess mileage or damage charges?
No. Check your actual finance agreement for mileage allowances, fair wear and tear criteria and hand-back conditions.
Why can PCP have lower payments but more interest?
Because part of the borrowed balance remains until the final balloon. That portion continues accruing interest during the agreement.
MoneyHelper — Buying a car with PCP
Not a lender's GMFV or representative APR quote · PCP-style amortization mathematics only, NOT a legal PCP or Hire Purchase offer. Does not calculate representative APR, mandatory contract fees not included in user-entered financed charges, GMFV, vehicle-return options, mileage, damage, ownership transfer fees, finance default rules or settlement rights. Balloon is optional for ownership, but real contract conditions apply.