Car Finance Calculator: Work Out the True Cost of PCP, HP & a Loan

How does car finance work?

Car finance lets you drive a car now and pay for it over time — usually 2 to 5 years — through a deposit and fixed monthly payments that include interest.

Most UK car finance is one of four types: PCP, HP, leasing (PCH) and a personal loan. They differ on one thing above all — whether, and how, you end up owning the car. For the full picture, read how car finance works.

Whichever you pick, the lender must be authorised by the FCA and run an affordability check before they agree to lend.

The 4 types of car finance: PCP, HP, leasing and loans

There are four main ways to finance a car in the UK, and the right one depends on whether you want to own the car and how you use it.

PCP keeps the monthly low by deferring a big chunk of the cost — the balloon — to the end. HP clears the whole price over the term, so you own the car once the last payment lands. A loan buys the car outright, so it's yours from day one.

PCP vs HP: which works out cheaper?

HP usually costs less overall, while PCP keeps the monthly lower. On a £20,000 car with £2,000 down over 48 months at 9.9% APR, HP runs about £452 a month and £23,695 in total.

The same car on PCP with an £8,000 balloon drops to roughly £314 a month — but the total to own it climbs to about £25,086, because you finance that balloon for the whole term. That £1,400 gap is the price of the lower monthly. See it broken down in PCP vs HP.

What is APR — and why a low monthly can cost more

APR is the yearly cost of the finance, including the interest and any compulsory fees. It's the one number that lets you compare deals fairly.

A lower monthly payment usually means a longer term, and a longer term means more interest — so the cheapest-looking deal is often the most expensive. Our APR calculator turns any monthly quote back into an APR and shows the total interest.

How much car finance can you get?

How much you can borrow depends on your income, your outgoings and your credit file — not a fixed limit. Lenders run an affordability check under FCA rules.

Our eligibility estimate works out an indicative amount from a monthly budget, with no credit check and no impact on your file.

Already paying? How to settle or change your deal

You can end most car finance early — settle it in full, overpay to clear it faster, hand it back, or sell the car.

• Settle in full: pay the outstanding balance now and save the remaining interest. Work it out with the settlement calculator.
• Overpay: put extra in each month to cut the interest and shorten the term.
• Voluntary termination: hand a PCP or HP car back once you've paid 50% — see voluntary termination.
• Sell or part-exchange: settle the finance from the sale and keep any equity.

Mis-sold car finance: could you be owed money?

Millions of UK car finance agreements taken out between 2007–2024 may have been mis-sold through hidden commission. If yours was, you may be owed redress.

The FCA is running a motor finance redress scheme after the Supreme Court ruled on commission disclosure on 1 August 2025. Payouts are expected through 2026. You can check your position with our compensation estimator and read the scandal explained.

Any figure is an estimate, not a promise — and you can claim free yourself, with no claims firm taking a cut.