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Car finance calculator
PCP, hire purchase or a personal loan on the same car: the monthly payment, the total interest and what each route really costs by the end.
The same APR is applied to all three routes so the structures are compared fairly. In practice dealer PCP/HP rates and personal loan rates are set separately and often differ, so check real quotes for each. The balloon (GMFV) defaults to 40% of the price; your dealer sets the real figure.
Same car, three ways to pay
PCP is the least cash out, but you hand the car back
Borrowing £18,000 over 48 months at 6.9% APR.
| PCP | HP | Loan | |
|---|---|---|---|
| Monthly payment | £285.00 | £430.20 | £430.20 |
| Total interest | £3,680 | £2,649 | £2,649 |
| Total paid | £15,680 | £22,649 | £22,649 |
| Own the car at the end? | No | Yes | From day one |
PCP looks cheap monthly because you have not paid for the whole car: the balloon (£8,000 here) is deferred to the end, and you pay interest on it the whole way through. HP and a loan cost more per month but clear the full price. With a personal loan you also own the car outright from day one; loan APRs are set by your bank, not the dealer, and often differ from showroom rates in either direction.
Whichever route, make sure the payment fits the rest of your money: budget planner.
Common questions
- What is the GMFV or balloon payment, and who sets it?
- The Guaranteed Minimum Future Value is the finance company's prediction of what the car will be worth at the end of the PCP, and it is the lump sum you must pay to keep the car. The lender sets it, not you, based on the car, the term and your agreed mileage. It is deliberately conservative: if the car is worth more than the GMFV at the end, the difference is equity you can put toward your next deposit; if it is worth less, you can hand the car back and walk away.
- How do mileage limits work on PCP?
- The GMFV is calculated on an annual mileage you agree up front, and going over it costs a pence-per-mile excess charge (commonly somewhere between 5p and 30p a mile, set out in your agreement) if you hand the car back. Underestimating your mileage to get a lower monthly payment is a false economy: 5,000 extra miles a year at 10p a mile on a four-year deal is £2,000. Damage beyond fair wear and tear is charged on top.
- Can I get out of a PCP or HP deal early?
- Usually yes, through voluntary termination. The Consumer Credit Act 1974 (sections 99 and 100) lets you terminate a regulated hire purchase or conditional sale agreement, which covers HP and PCP, at any time before the final payment is due. You owe at most the amount that brings your total payments up to half of the total price, plus any arrears and any damage beyond reasonable wear. Because PCP payments are small and the balloon is deferred, you often only reach the halfway mark late in the deal, so check your statement before assuming you can walk away cheaply. The alternative is an early settlement figure to buy the car outright.
- Why might my APR be higher than the advertised rate?
- Advertised car finance rates are representative APRs. Under the Consumer Credit (Advertisements) Regulations 2010 the advertiser only has to reasonably expect at least 51% of agreements from that advert to be at or below the advertised rate; the rest can be charged more, based on credit history, deposit and term. Dealer finance and bank loan rates are also set independently, so run this comparison again with the real quoted APR for each route before deciding.
- Should I pay the balloon at the end of my PCP?
- Compare the GMFV with what the car is actually worth. If the car is worth more than the balloon, paying it (with savings or by refinancing) buys the car below market value, and refinancing usually still beats handing back and financing another car. If the car is worth less than the balloon, hand it back: that is exactly the risk the guarantee exists to cover. The trap is drifting into a new PCP by default because the dealer positions it as the easy option.
- Is a personal loan better than dealer finance?
- A loan makes you a cash buyer: you own the car from day one, there are no mileage limits, and you can sell whenever you like. The maths in this tool shows the structures cost the same at the same APR, so the decision usually comes down to the rates you are actually offered, plus how much you value flexibility against the lower monthly payment and hand-back option of PCP. Watch for dealer deposit contributions on PCP, which can tilt the sums even when the APR looks worse.
Thinking about a straight bank loan instead? The loan repayment calculator adds overpayments and a payoff date to the picture. And before committing to any monthly payment, the budget planner checks it actually fits alongside everything else.