PCP vs HP Car Finance Calculator
The same car, the same deposit, the same APR — two very different deals. See the monthly payments, total interest, and true cost to own side by side, with the balances charted month by month.
Applied to both finance types for a like-for-like comparison
Set by the lender — typically 35–55% of the car's price
Cost comparison
| Line | PCP | HP |
|---|---|---|
| Monthly payment | £445.15 | £632.86 |
| Deposit | £3,000.00 | £3,000.00 |
| Optional final payment (GMFV) | £11,000.00 | — |
| Total interest | £7,367.47 | £5,377.53 |
| Total cost to own the car | £35,367.47 | £33,377.53 |
| Cost if you hand the car back | £24,367.47 | — |
Same APR applied to both for a like-for-like comparison. PCP mileage limits, excess-mileage and wear charges, and arrangement fees are not included.
How the maths differs
HP is a standard amortising loan: each payment covers the month's interest and chips away at the balance until it reaches zero. PCP amortises the balance only down to the GMFV, using the balloon-loan formula PMT = (P − B/(1+r)n) · r(1+r)n/((1+r)n − 1), where Bis the GMFV. Because the balance stays higher for the whole term, every month's interest charge is bigger.
Worked example
A £28,000 car with a £3,000 deposit at 9.9% APR over 48 months with an £11,000 GMFV: PCP costs £445.15 a month against £632.86 on HP. Owning the car outright totals £35,367 on PCP versus £33,378 on HP — the lower monthlies cost £1,990 in extra interest.
Frequently asked questions
What is the difference between PCP and HP?
Both finance the car price minus your deposit at an agreed APR. With HP (Hire Purchase) your payments clear the whole balance, so you own the car at the end. With PCP (Personal Contract Purchase) payments only cover the difference between the price and the GMFV — a deferred 'optional final payment' — so monthlies are much lower, but at the end you must pay the GMFV to own the car, hand it back, or trade in.
Why is PCP cheaper per month but more expensive overall?
PCP defers a large chunk of the balance (the GMFV) to the end of the agreement, and interest is charged on that deferred amount for the whole term. On a £28,000 car with £3,000 down at 9.9% over 48 months, PCP costs £445.15 a month versus £632.86 on HP — but owning the car costs £1,990 more in interest on PCP.
What is a GMFV (Guaranteed Minimum Future Value)?
The lender's guaranteed prediction of the car's value at the end of the agreement — typically 35–55% of the price depending on the car and mileage allowance. It becomes the optional final payment: pay it and the car is yours, or hand the car back and walk away (subject to mileage and condition charges).
Should I choose PCP or HP?
HP usually wins if you intend to keep the car: you pay less interest and own it outright. PCP suits lower monthly budgets, drivers who change cars every few years, or anyone who wants the option to walk away if the car is worth less than the GMFV. Watch PCP's mileage limits and condition charges — they're not included in headline quotes.