Car Finance Calculator - Work Out PCP & HP Monthly Payments

Which type of finance?

HP: own it at the end PCP: lower monthly, balloon at the end

Cash price of the car The on-the-road price you'd pay for the car in cash.

Deposit

Part-exchange (optional)

Term (months) Most deals run 24–60 months.

Representative APR (%) It's on the finance quote. Use 0 for a genuine 0% deal.

PCP vs HP, side by side

The same £18,000 car, £2,000 deposit, 48 months at 9.9% APR, with a £7,000 balloon on the PCP. Watch what the lower monthly payment actually costs.

Worked example: HP vs PCP on the same car
	HP	PCP
Monthly payment	£401.80	£281.29
Balloon at the end	—	£7,000
Total to own the car	£21,286.40	£22,501.92
Cost of credit	£3,286.40	£4,501.92

PCP wins on monthly cost and loses on total cost if you buy the car at the end: you're paying interest on the balloon the whole time. It comes into its own if you plan to hand the car back and change every few years. HP costs more each month but less overall, and the car is simply yours at the finish. Neither is "cheaper" in the abstract; it depends on whether you want to keep the car.

Reading a car finance deal without getting stung

Walk onto any forecourt and the number they'll lead with is the monthly payment, because it's the one that sounds smallest. A car at £3.00 a month feels affordable in a way that the same car at £18,000 never does, which is exactly why the monthly figure is the wrong thing to anchor on. Two deals with an identical monthly payment can hide wildly different total costs once you account for the term, the APR and, on PCP, the balloon lurking at the end.

The figure that actually tells you what a car costs is the total amount payable: every payment, plus the deposit, plus the balloon if you intend to keep the car. Put your own numbers into the calculator above and it works that total out for you, alongside the cost of credit: the pure interest, which is the total minus the price of the car. That single number is the fairest way to compare a 9.9% deal over four years against a chunkier one over three, or PCP against HP.

A few things worth holding in your head before you sign. On PCP, the low monthly payment is borrowed comfort: you're paying interest on the whole balance including the balloon, so the cost of credit is usually higher than the equivalent HP even though the monthlies are lower. PCP also pins you to an agreed mileage, and going over it stings at the end. And a part-exchange only flatters a deal if the dealer's offer for your old car is genuinely fair, so it's worth knowing what yours is really worth before it disappears into the deposit line.

None of that matters, though, if the car itself isn't what it seems. Committing to three or four years of payments on a car with a patchy MOT history or a suspicious mileage record is how a good monthly payment turns into an expensive mistake. Run the free MOT check to sanity-test the advert, then pull the full report on the one you're serious about, so the car you're financing is one you've actually checked. And once you know the running costs, our free car tax calculator, fuel cost calculator and ULEZ checker round out the true monthly picture.

Car finance calculator: common questions

How are car finance monthly payments worked out?

Your monthly payment comes from three things: the amount you borrow (the cash price minus your deposit and any part-exchange), the length of the deal in months, and the APR. On HP the payments clear the whole balance so you own the car at the end. On PCP a big chunk (the balloon) is left to the end, which pulls the monthly payment down but means you still owe that lump if you want to keep the car. This calculator runs the standard finance maths on whatever figures you put in.

What is the difference between PCP and HP?

HP (Hire Purchase) spreads the full price over the term: higher monthly payments, but the car is yours once the last one clears. PCP (Personal Contract Purchase) defers a large final payment (the balloon, or Guaranteed Minimum Future Value) to the end, so the monthlies are lower, but at the finish you choose whether to pay the balloon and keep it, hand it back, or roll any equity into a new deal. PCP also ties you to an agreed annual mileage.

What is a balloon payment or GMFV?

It's the lump sum left at the end of a PCP deal: the finance company's guaranteed minimum future value for the car. Your monthly payments cover the difference between the price and that figure, plus interest on the whole balance. If the car is worth more than the balloon when the deal ends, that difference is equity you can use; if it's worth less, you just hand the keys back and walk away.

Is 0% APR car finance really free?

At a true 0% APR you pay back exactly what you borrowed, so there's no cost of credit. But 0% deals are usually on new cars, often need a set minimum deposit, and can come instead of a cash discount, so a "0% finance" price and a "haggled cash" price aren't always the same thing. Always compare the total amount payable, not just the headline rate.

Does checking a car's history matter before financing it?

It matters more, not less. On a finance deal you're committing to years of payments, so it's worth knowing the car's real MOT history, mileage record and spec before you sign. Our £5.00 vehicle report pulls all of that from the DVLA and MOT record, so you're financing a car you've actually checked rather than one you're taking on trust.