Head to head
PCP vs a Personal Loan: Which Is Cheaper?
Finance the depreciation or buy the car outright — compared on cost, ownership and flexibility.
A personal loan usually costs less in total and you own the car from day one; PCP keeps the monthly lower but you only own the car if you pay the balloon.
A personal loan is usually cheaper overall and makes the car yours from day one, while PCP keeps the monthly payment lower. The loan buys the car outright; PCP finances only its drop in value.
If you want to own the car with no mileage limits and the lowest total, a loan tends to win. If a low monthly matters most, PCP does.
PCP vs personal loan at a glance
A personal loan makes you the owner immediately; PCP makes ownership optional and keeps the monthly down. The loan has no mileage limits or condition charges.
With a loan, the money is yours and the car is yours — the lender has no claim on it. With PCP, the finance company owns the car until you pay the balloon, and you're tied to mileage and condition terms.
| PCP | Personal loan | |
|---|---|---|
| Monthly | Lower (≈ £314) | Higher |
| Total cost | Higher to own (≈ £25,086) | Usually lower |
| Own the car? | Only if you pay the balloon | From day one |
| Mileage limits? | Yes | None |
| Best for | Lowest monthly, flexibility | Owning outright, no limits |
Worked example: PCP vs a loan on the same car
On a £20,000 car over 48 months, PCP is about £314 a month but roughly £25,086 in total to own; a personal loan costs more each month but usually less in total.
PCP's lower monthly comes from financing the balloon across the whole term; you pay interest on a sum you may never keep. A loan clears the debt steadily and the car is an asset you can sell whenever you like. Run both on the PCP calculator and the car loan calculator.
Worked example
Who each option suits
Take a loan to own the car outright with no limits; choose PCP for the lowest monthly and the option to change cars often.
- Personal loan if: you want to own the car from day one, drive high mileage, plan to keep it for years, or want the lowest total cost.
- PCP if: a low monthly payment matters most, you like swapping cars every few years, or you're unsure whether you'll keep it.
- A loan keeps you free of mileage and condition charges — useful if you can't predict your annual miles.
Work out your own numbers
Compare the monthly and the total on both before you decide — the gap can be hundreds of pounds.
Use the PCP calculator and the car loan calculator, then turn each quote into a true APR and total interest. See every option together on the car finance calculator.
Frequently asked
Is a personal loan cheaper than PCP?
Do you own the car with a personal loan or PCP?
Why is PCP's monthly payment lower than a loan's?
Does a personal loan have mileage limits?
Work out your next step
Independent calculators — pick the one that fits your situation.