PCP Car Finance Calculator (with HP Option)
Estimate your monthly payment on a PCP, or switch to HP mode to see the cost of paying the whole car off.
How the PCP calculator works
With a Personal Contract Purchase you pay a deposit, then monthly payments, and at the end you can pay a final "balloon" payment to own the car. MoneyHelper says the balloon is set by the finance company at the start and is based on the car's estimated future value.
The monthly payments are lower because you don't pay off the balloon during the term. But interest is still charged on the balloon for the whole term. MoneyHelper says "interest is charged on the car's full value minus your deposit". The calculator therefore works out the payment that, with interest, leaves exactly your balloon owing at the end.
How the HP calculator works
Hire purchase has no balloon. You repay the price minus your deposit, plus interest, in equal monthly payments, and you own the car once the agreement is complete. Because you repay the full amount, the monthly payment is higher than for a PCP on the same car, deposit and term.
3 worked examples
All three use a £22,000 car, £2,000 deposit, 9.9% APR and a 36-month term. The £8,800 and £5,000 balloons are illustrations, not typical values.
Example 1 — Hire Purchase
£22,000 − £2,000 = £20,000
Monthly payment:about £640 a month for 36 months
Total payable:£2,000 + (£640.45 × 36) = about £25,056, which is about £3,056 of interest. You own the car at the end.
Example 2 — PCP with an £8,800 balloon
£20,000, the same as HP, because interest runs on the whole amount
Monthly payment:about £428 a month for 36 months, much lower than HP
Total payable if you pay the balloon:£2,000 + (£428.15 × 36) + £8,800 = about £26,213, which is about £4,213 of interest
Example 3 — PCP with a £5,000 balloon
about £520 a month, higher than Example 2 because less is deferred to the end
Total payable if you pay the balloon:£2,000 + (£519.82 × 36) + £5,000 = about £25,714
Compare the totals as well as the monthly figures. Here the PCP has the lower monthly payment but a higher total cost than HP if you pay the balloon to keep the car, because the balloon is borrowed for the whole term. Handing the car back instead avoids the balloon, but then you don't own it.
HP vs PCP: the real difference
| Factor | Hire Purchase (HP) | PCP |
|---|---|---|
| What the payments cover | The full price minus deposit, plus interest | Most of the car's value, leaving the balloon to the end |
| Monthly payment | Higher | Lower, for the same price, deposit and term |
| Ownership at the end | Yours once all payments are made | Only if you pay the balloon |
| Mileage limit | None | Yes, with penalties if you go over (MoneyHelper says the allowance is usually 10,000 miles a year) |
| End of agreement | No decisions to make | Pay the balloon, hand the car back, or start a new deal |
| Condition checks | None at the end | Checked for damage and mileage if you hand it back |
What "representative APR" means
An advertised "representative APR" is not a guaranteed rate for everyone. The FCA Handbook's definition includes a 51% test: the rate has to be one that at least 51% of the people accepted for that credit get. That means up to 49% of accepted customers can be offered a higher rate, depending on their credit profile.
The FCA published a consultation paper (CP26/15) in April 2026 that asks whether the representative APR and the 51% threshold are still appropriate. It does not propose changing them yet, so the rule is unchanged at the time of writing. Check the FCA's site for any later outcome.
Your options at the end of a PCP
MoneyHelper lists these end-of-contract options:
- Pay the balloon and buy the car outright
- Hand the car back. The dealer checks for damage and mileage, and you may face a penalty
- Agree a new PCP with the same dealer, which needs a new credit check. If the car is worth more than the guaranteed future value, the difference can count towards a new deposit, but only with that dealer
- Refinance the balloon. You keep the car, but you still face a balloon payment later
What this calculator can't tell you
Your approved APR
The rate you are offered depends on a credit assessment, which the calculator can't predict.
Your lender's exact method and fees
The calculator uses a standard reducing-balance method with equal monthly payments. Real agreements can include fees, such as an option-to-purchase fee, and can start the first payment on a different day. Check your quote.
Whether the balloon is realistic
The balloon in the calculator is a figure you enter. Use the one from your quote.
Mileage and condition charges
These apply only if you hand a PCP car back and are not included.
Common mistakes
Comparing only the monthly payment
A lower monthly payment can come with a higher total cost, as Example 2 shows. Compare the total payable and what you will own at the end.
Assuming the advertised APR is what you'll get
Only the 51% test applies to the advertised rate. Get a personalised quote.
Underestimating your mileage
MoneyHelper says a higher allowance means higher monthly payments, and exceeding it usually triggers penalties. Be realistic upfront.
Having no plan for the final payment
MoneyHelper warns that some people get stuck in a cycle of changing cars every few years to avoid the balloon. Decide early what you would do at the end.
Before you sign
- Get quotes from more than one lender, including your bank and independent brokers, not just the dealer
- Compare the total amount payable, not only the monthly payment
- Be realistic about annual mileage on a PCP
- Check the early-exit rules. MoneyHelper says voluntary termination lets you end a contract once you have paid 50% of its value, but on a PCP the contract value includes the balloon, so you usually can't use it until near the end
- Remember the running costs are yours. Insurance, fuel, repairs and maintenance are not part of the finance payment
The FCA has a redress scheme for some motor finance agreements taken out between 6 April 2007 and 1 November 2024, where the dealer was paid commission. Its details and dates have been changing, including a suspension of parts of the scheme in July 2026. Check the FCA's motor finance page for the current position before you pay anyone to make a claim.
🚗 See your full annual running costs too
Finance is only one part of car ownership cost. Add fuel, insurance, tax and servicing for the complete picture.
Use the Running Cost Calculator →How we calculate
Amount borrowed = price − deposit, for both HP and PCP.
Monthly rate = (1 + APR)1/12 − 1, so that the APR you enter is treated as an effective annual rate.
Monthly payment = (amount borrowed − balloon ÷ (1 + monthly rate)n) × rate × (1 + rate)n ÷ ((1 + rate)n − 1), where n is the number of months. For HP the balloon is £0.
Total payable = deposit + monthly payment × n + balloon. Interest = total payable − price.
Frequently asked questions
How does a PCP calculator work?
It works out the monthly payment that, with interest on the whole amount borrowed, leaves the balloon payment owing at the end. The monthly payment is lower than HP because the balloon isn't repaid during the term, but interest still runs on it.
What's the difference between PCP and HP?
With HP you repay the full price plus interest and own the car at the end. With PCP the monthly payments are lower and you own the car only if you pay the final balloon payment.
What is a balloon payment?
According to MoneyHelper, it is a large one-off payment at the end of a PCP, set by the finance company at the start and based on the car's estimated future value. Paying it is optional, but if you don't, you won't own the car.
Will I definitely get the advertised APR?
Not necessarily. The FCA's definition of a representative APR includes a 51% test, so up to 49% of accepted customers can be offered a higher rate. Your rate depends on your credit assessment.
What happens if I go over my PCP mileage limit?
MoneyHelper says exceeding the allowance usually triggers penalties, which can be costly. Check the per-mile charge in your agreement.
Can I end a car finance agreement early?
Often yes, but the terms vary. MoneyHelper describes voluntary termination, where you can end a contract after paying 50% of its value and return the car, and early settlement, where you pay a larger final amount to own the car sooner, usually with admin fees. Check your agreement.
References & data sources
- MoneyHelper — Buying a car with Personal Contract Purchase (PCP). How PCP works, the balloon payment, end-of-contract options, mileage limits and voluntary termination.
- FCA Handbook — CONC 3.5 (representative examples and APR). The representative APR rules, including the reference to the 51% test.
- FCA — Motor finance redress scheme. Who is covered and the key dates.
This calculator gives a simplified illustration, not a finance offer, personalised quote or financial advice. Always obtain a quote from the lender before deciding.
Prakash
Prakash is the founder and editor of UK Driving Tools. He maintains the site's calculators and guides and checks the rates and rules they use against official UK sources, such as GOV.UK, the DVLA, HMRC and Transport for London, before publishing.
Pages are drafted with the help of AI tools and then checked by the editor. He isn't a lawyer, accountant or UK-qualified adviser, so every page lists its sources and states what its calculator can't tell you. Nothing on this site is legal or financial advice.
Pages on UK Driving Tools are drafted with the help of AI tools. Before publishing, the figures and rules on each page are checked against the official source named on the page, and calculator examples are tested against the working formula. Pages are updated when rates or rules change. Our Editorial Policy explains the full process, including how to report a mistake.
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