Compare PCP, HP and Personal Loan monthly payments. See total interest, ownership costs and the cheapest option for your budget.
Uses values entered in PCP, HP and Loan tabs. Fill in those first and calculate each one before comparing.
Calculate PCP, HP and Loan first to see comparison.
| Category | Average Price | Typical Finance APR | Monthly (36m, 10% deposit) |
|---|---|---|---|
| New car (average) | £30,000 | 6-10% APR | ~£650-750/mo (PCP) |
| Used car (average) | £16,000 | 10-18% APR | ~£350-420/mo (HP) |
| Budget used (<5yr) | £8,000-12,000 | 14-22% APR | ~£200-300/mo |
| Premium new | £45,000+ | 5-8% APR | ~£750-1000/mo (PCP) |
| Electric (new) | £35,000 | 5-9% APR | ~£500-650/mo (PCP) |
PCP is the most popular UK car finance. You pay a deposit, then monthly payments covering only the depreciation on the car (not the full value). At the end, you have three options: (1) Return the car - you owe nothing more, (2) Buy the car by paying the Guaranteed Future Value (GFV/balloon payment), or (3) Part-exchange and use any equity towards a new PCP. Monthly payments are lowest of the three options but you never automatically own the car.
HP is straightforward: deposit plus fixed monthly payments covering the full car cost plus interest. At the end of the term, you automatically own the car - no balloon payment required. Monthly payments are higher than PCP because you're paying for the whole car. Interest rates on HP are often slightly higher than PCP from manufacturers.
A personal loan from a bank or building society is often the cheapest way to finance a car purchase. You own the car outright from day one (unlike HP/PCP where the finance company technically owns it). Loans above £7,500 can attract rates as low as 5-7% APR - significantly lower than dealer finance. The car can be used as a backup to secure the loan in some cases.
Under the Consumer Credit Act 1974, you can settle any regulated car finance agreement early. The lender can charge up to 58 days' interest as an early settlement fee. Request a settlement figure in writing - the lender must provide this within 7 days. For PCP, you can also use the "Voluntary Termination" right once you've paid 50% of the total amount payable.
GAP (Guaranteed Asset Protection) insurance covers the difference between your car insurance payout (market value) and what you still owe on finance if your car is written off. Without GAP, if your £20,000 car is written off after 2 years and is now worth £12,000, but you still owe £15,000 on finance, you'd be £3,000 out of pocket. GAP insurance covers this shortfall. Always compare GAP prices independently - dealer prices are typically 2-3x the cost of independent GAP providers.
When ending a PCP and getting a new car, your part exchange value is the car's market value minus the outstanding GFV. If your GFV is £8,000 and the car is worth £11,000, you have £3,000 equity to put towards your next car's deposit. Use this as negotiating leverage with dealers. Check independent valuations from We Buy Any Car, Arnold Clark and Auto Trader before accepting a dealer part-exchange offer.