Car Finance Calculator
Work out the monthly payment and total cost of a car on PCP, hire purchase or a personal loan, and see which is cheapest for the same car.
Your car deal
Find it under “Annual Percentage Rate of Charge” on your agreement or quote. A “flat rate” or “rate of interest” looks lower but understates the real cost.
Handing the car back instead? You pay £17,086.64 in total and own nothing at the end, as long as it is in good condition and within your mileage limit.
Same car, compared
Totals include your deposit. PCP payments are lower because you don’t pay off the final amount until the end. Estimates only: your lender’s quote and fees may differ.
Worked example
A £20,000 car with a £2,000 deposit over 4 years:
| Finance | Monthly | Total cost |
|---|---|---|
| Hire Purchase at 9.9% APR | £452.02 | £23,697 |
| PCP at 9.9% APR, £8,000 balloon, keep the car | £314.30 | £25,087 |
| PCP, hand the car back | £314.30 | £17,087 (no car) |
| Personal loan at 6.9% APR | £428.46 | £22,566 |
PCP costs £138 a month less than HP, but if you keep the car it costs about £1,390 more in total, because the £8,000 balloon gathers interest for the whole four years.
How it’s worked out
Monthly payment = (amount borrowed − today’s value of the balloon) × r ÷ (1 − (1 + r)−months)
Here r is the monthly interest rate taken from the APR. For hire purchase and loans there is no balloon. Totals include your deposit.
Before you sign
- Mileage and condition: PCP deals charge for every mile over the limit, often 5p to 15p a mile, and for damage beyond fair wear and tear.
- Fees: check for an arrangement fee or an option-to-purchase fee, and use the APR, which includes them.
- Commission: the dealer must tell you if they are paid commission by the lender and how it works.
Clearing other debts first? Try the credit card payoff calculator.
Sources
Figures are checked against these official sources. Last reviewed 7 November 2026.
Common questions
What is the difference between PCP and hire purchase?
With hire purchase (HP) your monthly payments pay off the whole car, and it is yours after the last payment. With PCP, part of the price is left as a final "balloon" payment. Monthly payments are lower, but at the end you either pay the balloon to keep the car, hand it back, or use any equity towards your next car.
Is PCP or HP cheaper?
If you want to keep the car, HP is usually cheaper overall because you pay interest on a balance that falls faster. PCP keeps monthly payments low, but if you pay the balloon to keep the car, you normally pay more interest in total.
What is the balloon payment on PCP?
It is the amount the lender expects the car to be worth at the end of the deal, also called the guaranteed future value (GFV) or optional final payment. You only pay it if you want to keep the car.
Is a personal loan better than car finance?
Sometimes. A personal loan can have a lower APR, and the car is yours from day one. But the loan is not secured on the car, so you cannot simply hand it back. Compare the total cost of each.
Should I use the APR or the flat rate?
Always the APR. Many agreements also show a flat rate (for example 14.45% a year), which is worked out on the full amount borrowed for the whole term even though you pay it down each month. It looks much lower than the real cost. The APR (for example 26.72%) is the true yearly cost and is the figure to compare deals with.
Can I hand a PCP car back early?
Yes. Once you have paid half of the total amount payable (including the balloon and fees), you have a legal right to hand the car back under voluntary termination, as long as it is in reasonable condition.