UK Car Finance Calculator (HP vs. PCP) (2026)
Compare UK Hire Purchase (HP) vs. Personal Contract Purchase (PCP) car finance: monthly payments, interest, and balloon costs.
United Kingdom Calculator
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Move the sliders or type exact numbers. Results update instantly.
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PCP Monthly Payment
£429
Based on your selected car finance uk assumptions. Try different sliders to compare scenarios.
HP Monthly Payment
£621
Total PCP Cost (If Kept)
£34,607
Total HP Cost
£32,805
These calculations are financial projections and planning estimates, not tax, legal or licensed financial advice. HMRC 2025/2026 statutory rates, NI thresholds, and local council rates apply.
Hire Purchase (HP) vs Personal Contract Purchase (PCP): Cost Comparison Matrix
Compare estimated monthly payments and total cost across typical UK vehicle price brackets. Estimates assume a 48-month term at a representative 8.9% APR.
Representative Monthly Payments & Total Cost (48-Month Term)
HP pays off the full car value; PCP leaves an optional final balloon payment (GMFV).
| Vehicle Price | Deposit | HP Monthly | PCP Monthly | PCP Balloon (GMFV) | Total HP Cost | Total PCP Cost |
|---|---|---|---|---|---|---|
| £12,000 (Used Hatchback) | £1,500 | £258/mo | £165/mo | £5,400 | £13,884 | £14,820 |
| £20,000 (Family Saloon) | £2,500 | £431/mo | £269/mo | £9,200 | £23,188 | £24,612 |
| £30,000 (Compact SUV) | £4,000 | £640/mo | £385/mo | £14,100 | £34,720 | £36,580 |
| £45,000 (Premium EV / SUV) | £6,000 | £960/mo | £545/mo | £22,500 | £52,080 | £54,660 |
| £60,000 (Luxury Executive) | £8,000 | £1,280/mo | £715/mo | £31,000 | £69,440 | £73,320 |
50% Voluntary Termination Rule (Consumer Credit Act)
Under Section 99/100 of the UK Consumer Credit Act 1974, you have the legal right to hand the car back and cancel the agreement once you have paid 50% of the total amount payable (including deposit, monthly payments, and balloon payment). This applies to both HP and PCP without harming your credit rating.
Which is Better: HP or PCP?
Choose Hire Purchase (HP) if you plan to keep the car for 5+ years, want no mileage restrictions, and want lower total interest costs.Choose PCP if you prefer lower monthly payments and plan to change cars every 3 to 4 years using equity as a deposit for your next vehicle.
How to Use the Car Finance UK
Enter vehicle price & deposit
Input total showroom price and your upfront cash or part-exchange deposit.
Set APR and contract duration
Enter finance interest rate and repayment period (36, 48, or 60 months).
Enter PCP balloon payment (GMFV)
Input dealer Guaranteed Minimum Future Value to compare monthly payments against Hire Purchase (HP).
Formula & Calculation Methodology
PCP = Depreciation & Balloon Interest | HP = Full Loan AmortizationThis calculator uses standard United Kingdom financial formulas, IRS thresholds, and amortization schedules. All results compute instantly in your browser with zero data stored or transmitted.
Calculation Examples & Scenarios
Mid-Size Family SUV (£28,000 Vehicle)
£28,000 vehicle, £3,000 deposit, 8.9% APR, 48 months, £11,000 PCP balloon payment.
Compact Commuter Car (£16,000 Vehicle)
£16,000 vehicle, £2,000 deposit, 7.9% APR, 36 months, £7,000 balloon.
Key Benefits
- Direct side-by-side comparison of PCP and HP monthly commitments
- Accurately calculates total interest paid including balloon payment carrying costs
- Helps buyers negotiate effectively with car dealerships and independent brokers
Common Use Cases
- Drivers deciding between upgrading vehicles every 3-4 years (PCP) vs long-term ownership (HP)
- Budget-conscious car buyers evaluating monthly affordability vs end-of-term balloon liabilities
- Motorists reviewing voluntary termination rights under the Consumer Credit Act
PCP vs HP: Understanding the Core Differences
Personal Contract Purchase (PCP) defers a large proportion of the car’s cost to the end of the agreement as a Guaranteed Minimum Future Value (balloon payment). This produces substantially lower monthly payments, but you do not own the vehicle unless you pay the final balloon.
Hire Purchase (HP) spreads the entire purchase price plus interest across your agreed monthly installments. Once the final monthly payment is made, you own the car outright with no balloon fee.
End of PCP Agreement Options
At the conclusion of a PCP contract, you have three clear choices: 1) Pay the optional final balloon payment to keep the vehicle; 2) Hand the car back to the finance provider with nothing more to pay (assuming mileage and condition limits are met); or 3) Part-exchange the car and use any equity above the GMFV toward your next vehicle deposit.
Frequently Asked Questions
An HP calculator divides the vehicle cost minus your deposit across your chosen loan term (typically 36 to 60 months) with interest applied. Because you amortize the entire vehicle balance, you automatically own the car upon paying the final monthly installment with no large balloon payment.
With Hire Purchase (HP), payments are higher but you pay off the full value of the vehicle and own it outright. With Personal Contract Purchase (PCP), payments are lower because you only fund depreciation, leaving a large optional balloon payment (GMFV) at the end if you want to keep the car.
You have three choices: pay the optional balloon payment (GMFV) to own the car, hand the car back with nothing more to pay (subject to mileage and condition), or trade it in against a new car using any positive equity.
Yes. Under Section 99 of the UK Consumer Credit Act 1974, you have the legal right to hand the car back once you have paid at least 50% of the total amount payable, without impacting your credit score.
Competitive dealer and broker APRs typically range between 6.9% and 9.9% for good credit, with zero-deposit or manufacturer subvented 0% promotional rates available on select new vehicles.
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