UK Car Finance Calculator

How the UK Car Finance Calculator Works

Our UK car finance calculator estimates your monthly payments and total cost of car finance across the four most common finance products in the UK: Personal Contract Purchase (PCP), Hire Purchase (HP), Personal Contract Hire (PCH) and a standard personal loan. Enter the car price, your deposit, the APR the dealer or bank has quoted, the term in months, and for PCP or PCH your expected annual mileage. The calculator then shows your monthly payment, total interest paid, total cost of the deal, and for PCP the optional final balloon payment you would need to pay to own the car outright.

Personal Contract Purchase (PCP)

PCP is the most popular way to finance a new car in the UK. You pay a deposit, followed by fixed monthly payments over a term of typically 24 to 48 months. The key difference from a loan is that the monthly payments only cover the car's depreciation during the agreement — not its full price. At the end of the term you have three choices: hand the car back, pay the optional final balloon payment (the Guaranteed Minimum Future Value, or GMFV) to own the car, or trade it in and use any equity as a deposit on a new deal. Because you are only financing the depreciation, PCP monthly payments are usually lower than HP for the same car and term.

Monthly Payment = (Amount Borrowed − Balloon Value × Discount Factor) ÷ Annuity Factor

The balloon value is set by the lender based on the predicted residual value of the car at the end of the agreement, which is influenced by the term and the annual mileage you agree to. Higher mileage reduces the balloon value and increases monthly payments.

Hire Purchase (HP)

HP is a simpler, more traditional form of car finance. You pay a deposit and then fixed monthly instalments that cover the entire cost of the car plus interest. There is no balloon payment at the end — once you make the final payment, you own the car outright. Because you are spreading the full purchase price across the term, HP monthly payments are typically higher than PCP, but the total amount of interest paid is usually lower because you are paying down the principal faster. HP is a good option if you know you want to own the car at the end and can afford the higher monthly payments.

Monthly Payment = Amount Borrowed × (r(1+r)^n) ÷ ((1+r)^n − 1)

Where r is the monthly interest rate (APR ÷ 12) and n is the number of months in the term.

Personal Contract Hire (PCH)

PCH is a form of leasing, not finance. You pay an initial rental (often 3, 6 or 9 monthly payments upfront), followed by fixed monthly rentals for the duration of the agreement, typically 24 to 48 months. At the end you simply hand the car back — you never have the option to buy it. PCH monthly rentals are similar to PCP but there is no balloon payment and no purchase option. You are bound by an agreed annual mileage limit and the car must be returned in good condition, otherwise excess mileage and damage charges apply. PCH suits drivers who always want a new car, don't want to own it, and want predictable monthly costs.

Personal Loan

A personal loan from a bank or building society lets you buy the car outright and repay the loan in fixed monthly instalments. Because you own the car from day one, the loan is unsecured (though some lenders secure it against the car) and you are free to sell the car at any time. Personal loan APRs can be lower than dealer finance if you have a good credit score, and there is no balloon payment. The calculation is identical to HP — an amortising loan with equal monthly payments — but the APR and flexibility can differ.

Pros and Cons of Each Finance Type

• PCP pros: Lower monthly payments, flexibility at the end (keep, return, or trade in), drive a newer car for less.
• PCP cons: You don't own the car until the balloon is paid, mileage limits apply, total cost is higher than HP if you buy the car.
• HP pros: You own the car at the end, no mileage limits, simpler and easier to settle early, total interest usually lower than PCP.
• HP cons: Higher monthly payments than PCP, less flexibility at the end of the term.
• PCH pros: Predictable monthly cost, no resale worry, often includes road tax and breakdown, drive a new car every few years.
• PCH cons: You never own the car, mileage limits and condition charges, no equity to carry into the next deal.
• Personal loan pros: You own the car immediately, no mileage limits, can sell anytime, potentially lower APR.
• Personal loan cons: Requires good credit for the best rates, monthly payments can be higher than PCP, no dealer deposit contribution.

What Affects Your Car Finance Monthly Payment

Several factors drive the size of your monthly payment. A larger deposit reduces the amount you borrow and therefore the monthly cost. A longer term spreads the payments over more months, lowering each payment but increasing the total interest paid. A higher APR increases both the monthly payment and the total cost of borrowing. For PCP and PCH, a higher agreed annual mileage reduces the predicted residual value of the car, which raises the monthly payment. The car's price itself is the biggest single factor — a more expensive car means more to finance, even with the same deposit percentage.

What This Calculator Does Not Include

• Dealer fees and admin charges: Some lenders add documentation or option-to-purchase fees, typically £100–£300.
• Excess mileage charges: PCP and PCH charge 3p–15p per mile over your agreed limit.
• Damage and wear charges: Returned PCP and PCH cars are inspected for damage beyond fair wear and tear.
• Optional final payment interest: If you choose to pay the balloon in instalments, additional interest may apply.
• Gap insurance and payment protection: Optional add-ons that increase the total cost of the deal.