What is the difference between PCP and HP?

PCP (personal contract purchase) usually has lower monthly payments because part of the car's value is deferred as a balloon (GFV) at the end. HP (hire purchase) spreads the full amount over the term with no balloon, so monthly payments are typically higher but you own the car at the end.

Which is cheaper overall, PCP or HP?

It depends on whether you keep the car. If you pay the PCP balloon and keep the vehicle, total repayable is often higher than HP for the same APR and term. If you hand the car back within mileage and condition limits, PCP can cost less over the agreement. Use the calculator to compare both paths.

Is this PCP vs HP calculator free?

Yes. Enter a car price, deposit, term, APR and estimated balloon percentage to see side-by-side estimates. Results are illustrative only and do not replace a lender quote.

HP car finance calculator — PCP vs HP comparison

Use this tool to compare typical PCP and HP structures on the same car. Enter a car price, deposit, term, APR and an estimated PCP balloon percentage to see how the monthly payments and total repayable differ. Not sure what monthly payment you can afford? Start with our free UK car affordability calculator. The results are estimates only and do not include fees or guarantee any lending decision.

Reviewed by: Oliver Burton, Editor · Last updated: 08 June 2026

HP (hire purchase)

Same payment every month, no balloon at the end.

Monthly payment: £414
Total repayable: £19,883
Total interest: £2,883

PCP (personal contract purchase)

Lower monthly payment with a balloon / GFV at the end.

Monthly payment: £272
Balloon / GFV at end of term: £8,000
Total if you buy (inc. balloon): £21,054
Total interest (inc. balloon): £4,054

Disclaimer

This calculator is for estimation only. It is not financial advice and does not represent a lending decision. Your actual affordability and car finance options in the UK depend on your circumstances and the lender's criteria.

PCP vs HP at a glance

Use this table alongside the calculator above. Figures are structural differences, not quotes—APR, fees and balloons vary by lender. For rate context see car finance APR explained.

Feature	PCP	HP
Monthly payments	Usually lower — you finance depreciation + interest	Usually higher — you finance the full amount + interest
End of agreement	Hand back, part-exchange, or pay the balloon (GFV) to keep	You own the car after the final payment
Balloon / GFV	Yes — optional final payment if you keep the car	No balloon
Mileage & condition	Limits apply if you hand the car back	No mileage cap from the finance product
Best suited when	You want lower instalments and may change cars often	You want clear ownership and no end balloon
Total cost if you keep the car	Often higher once the balloon is paid	Often lower total credit cost at the same APR

HP shows a single monthly payment with no balloon. PCP shows a lower monthly payment plus the balloon you would owe if you keep the car. Mileage and condition limits apply if you hand a PCP car back—check your agreement. More context: why PCP dominates UK car finance · leasing affordability.

Frequently asked questions

What is the difference between PCP and HP?: PCP (personal contract purchase) usually has lower monthly payments because part of the car's value is deferred as a balloon (GFV) at the end. HP (hire purchase) spreads the full amount over the term with no balloon, so monthly payments are typically higher but you own the car at the end.
Which is cheaper overall, PCP or HP?: It depends on whether you keep the car. If you pay the PCP balloon and keep the vehicle, total repayable is often higher than HP for the same APR and term. If you hand the car back within mileage and condition limits, PCP can cost less over the agreement. Use the calculator to compare both paths.
Is this PCP vs HP calculator free?: Yes. Enter a car price, deposit, term, APR and estimated balloon percentage to see side-by-side estimates. Results are illustrative only and do not replace a lender quote.

Sources & notes

Our calculators and guides draw on publicly available UK guidance. We review content periodically but do not guarantee that external sources remain unchanged. See our about page for how we use these tools.

MoneyHelper – How to find the right way to buy a car
General guidance on budgeting and car finance options in the UK.
MoneyHelper – Work out your budget
Household budgeting principles used alongside affordability rules of thumb.
FCA – Consumer credit and your rights
Regulatory context for regulated car finance agreements.
FCA Handbook – CONC 5.2A (creditworthiness and affordability)
How FCA-regulated lenders must assess affordability (illustrative reference).
Black Horse – Car finance (sample lender information)
Example of how a major UK motor-finance provider describes its products.
Santander – Car finance (sample lender information)
Example lender product information; rates and criteria vary by provider.

Compliance notes

Car Affordability UK is not authorised or regulated by the Financial Conduct Authority (FCA). We do not provide regulated financial advice, credit broking or lending.
Calculator outputs are illustrative estimates based on the inputs you provide and published third-party guidance. They are not quotes, offers of credit or lending decisions.
FCA-regulated lenders apply their own affordability assessments, which may differ from the percentage rules of thumb used on this site. Always check formal terms before signing any agreement.
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