Car Finance (PCP/HP) Calculator
NewEstimate monthly payments for PCP or HP car finance deals.
What is the Car Finance (PCP/HP) Calculator?
A car finance calculator estimates the monthly payment for a PCP (Personal Contract Purchase) or HP (Hire Purchase) deal, based on the cash price, deposit, APR and term, plus an optional final balloon payment (GFV) for PCP deals. It works by subtracting the deposit and GFV from the cash price to find the amount actually being financed, then applying the standard loan amortisation formula to that amount over the agreed term — with HP, the GFV is set to zero since the whole balance is paid off in monthly instalments. To check it manually: financed amount = price − deposit − GFV, then apply the amortisation formula M = P × r × (1+r)ⁿ ÷ ((1+r)ⁿ − 1) using your monthly rate and number of months — real dealer quotes also include fees the lender factors into their own APR calculation.
How it works
Hire Purchase (HP) splits the full vehicle price (minus any deposit) into equal monthly instalments over the agreement term — once the final payment is made, you own the car outright. Personal Contract Purchase (PCP) works differently: your monthly payments are calculated to cover the car's expected depreciation over the term, not its full price, which is why PCP monthly payments are typically lower than HP for the same car.
At the end of a PCP deal, you're left with a choice: pay the pre-agreed final "balloon" payment (sometimes called the Guaranteed Minimum Future Value, GMFV) to own the car outright, hand the car back and walk away, or use any equity in the car as a deposit towards a new deal.
UK context
UK lenders must advertise a representative APR — the rate that at least 51% of accepted applicants will actually be offered — so the rate you personally receive can differ based on your credit profile. PCP deals typically come with an annual mileage limit; exceeding it usually triggers an excess mileage charge at the end of the agreement, so it's worth being realistic about your expected mileage when choosing a deal.
Tips
- Compare deals on total cost over the full term (all payments plus any final balloon payment for PCP), not just the monthly figure, since a lower monthly payment can still mean a higher overall cost.
- If you go over the agreed mileage limit on a PCP deal, excess mileage charges apply — choose a realistic annual mileage estimate upfront rather than the lowest-payment option.
- With HP you build ownership equity from month one; with PCP you don't own the car unless you make the final balloon payment — factor this into which option suits your circumstances.
Frequently asked questions
What's the main difference between PCP and HP?
HP finances the full vehicle price and you own the car once all payments are made. PCP finances the car's expected depreciation, giving lower monthly payments, but you only own the car if you pay the final balloon payment at the end — otherwise you hand it back or part-exchange.
What happens if I exceed my PCP mileage allowance?
Most PCP agreements charge a per-mile excess fee for mileage beyond the agreed annual limit, applied at the end of the agreement — it's worth choosing a realistic mileage estimate upfront to avoid this.
Why is the interest rate I'm offered different from the advertised rate?
UK lenders only have to offer their advertised "representative APR" to at least 51% of successful applicants — your personal rate depends on your credit history and circumstances, and can be higher (or occasionally lower).
Can I settle a PCP or HP agreement early?
Yes, both can typically be settled early, though early settlement figures and any charges vary by lender and agreement — check your specific finance agreement or contact the lender for an up-to-date settlement figure.
A quick note
Interest rates, deposit requirements and mileage terms vary by lender and change over time — this page explains how PCP and HP repayments are calculated, not a specific finance offer. Always check the full terms of any finance agreement before signing.