Plain-English guide
PCP vs HP vs Leasing: Which Is Cheaper?
PCP, HP and leasing compared on cost, ownership and mileage — with a worked example on the same car.
HP usually costs less overall and leaves you owning the car; PCP keeps the monthly lower; leasing is cheapest per month but you never own anything.
HP usually works out cheaper overall and leaves you owning the car, while PCP keeps the monthly payment lower and leasing is cheapest per month but never leads to ownership. The difference comes down to the balloon and whether you keep the car.
Here's the difference between the three, which is cheaper on the same car, which suits your mileage, and which lets you own it — then you can run your own numbers.
The difference between PCP, HP and leasing
PCP finances the car's depreciation with an optional balloon, HP finances the whole price so you own it, and leasing is long-term rental you hand back. That single difference drives the cost and the ownership.
PCP and leasing both set a mileage limit because the car's future value depends on it. HP has no limit, because you're buying the whole car. See each in detail on PCP and HP.
| PCP | HP | Leasing | |
|---|---|---|---|
| Monthly | Low | Higher | Lowest |
| Balloon? | Yes (GMFV) | No | No |
| Own it? | Only if you pay the balloon | Yes, at the end | No |
| Mileage limit? | Yes | No | Yes |
Is PCP or HP cheaper?
HP is cheaper overall; PCP keeps the monthly lower. On a £20,000 car with £2,000 down over 48 months at 9.9% APR, HP costs about £452 a month and £23,695 in total — PCP with an £8,000 balloon is about £314 a month but £25,086 to own.
Put your own price, deposit and term in to see the gap on your numbers — compare on the PCP calculator or check the interest on the APR calculator.
Worked example: the same £20,000 car
Which suits low vs high mileage?
HP suits high mileage because it has no limit; PCP and leasing suit lower, predictable mileage. Go over a PCP or lease limit and you pay an excess-mileage charge.
PCP and leasing set an annual mileage cap — often 8,000 to 12,000 miles — and charge a few pence per mile over it, because extra miles cut the car's future value. If you drive a lot or your mileage is hard to predict, HP avoids the charge entirely, since you own the whole car. Our mileage limits guide shows how the charges add up.
Which lets you own the car?
HP leaves you owning the car at the end, PCP only if you pay the balloon, and leasing never does. Ownership is the clearest line between the three.
With HP, the car is yours once the final payment and a small option-to-purchase fee are made. With PCP, you own it only if you pay the balloon (the GMFV); otherwise you hand it back or part-exchange. Leasing is rental from start to finish, so you always return the car.
Work out your own numbers
The cheapest choice depends on your price, deposit, term and mileage — so run your own figures. The calculators show the monthly and the total amount payable side by side.
Start on the main car finance calculator to compare all the options at once, or go straight to the PCP or HP calculator. For a lease, use the leasing calculator.
Frequently asked
What is the difference between PCP, HP and leasing?
Is PCP or HP cheaper?
Which is best for high mileage, PCP or HP?
Which car finance lets you own the car?
Work out your next step
Independent calculators — pick the one that fits your situation.