What is the main difference between PCP and HP?

With HP, you repay the full amount you borrow over the term and own the car at the end (after any option‑to‑purchase fee). With PCP, a portion of the car's value is left as a balloon / guaranteed future value, so monthly payments are usually lower but you must either pay the balloon, refinance it, or hand the car back at the end.

Does this calculator show my exact lender quote?

No. The calculator is for illustration only. It uses the price, deposit, APR, term and balloon percentage you enter to estimate payments, but it does not include fees and is not a lending offer.

How should I choose between PCP and HP?

HP may suit you if you want to keep the car and prefer to pay more each month but less overall interest. PCP may suit you if you prefer lower monthly payments and are comfortable changing or handing back the car at the end rather than keeping it long term.

PCP vs HP car finance calculator

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: James Hartley, Independent personal finance editorLast updated: 08 June 2026

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 criteria of individual UK lenders. Always check real quotes from lenders or speak to a regulated financial adviser before committing.

HP (hire purchase)

Same payment every month, no balloon at the end.

Monthly payment: £414
Amount financed: £17,000
Total interest: £2,883
Total repayable: £19,883

PCP (personal contract purchase)

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

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

Check your finance options

Use the calculators on this site to see a rough budget, then check live offers with UK finance providers. We are not a lender and we do not make lending decisions—everything here is an estimate only.

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How we compare PCP and HP

For HP we take the car price minus your deposit and treat that as the amount financed over the whole term. For PCP we use the same price, deposit, APR and term, but you also set a balloon / guaranteed future value as a percentage of the price. We then work out an estimated PCP monthly payment and show what you might pay in total if you keep the car and settle the balloon.

When PCP usually costs less per month

PCP monthly payments are typically lower than HP for the same car because you are not repaying the full value—part of it is deferred to the balloon. That can make a newer or more expensive car feel affordable. The trade-off is that at the end you must pay the balloon to keep the car, refinance it, or hand the car back. If you hand it back you have no equity. Use the calculator to see both the monthly difference and the total repayable so you can compare the true cost.

When HP can make more sense

If you plan to keep the car long term and want to own it outright, HP avoids a balloon and you know from the start what you will pay in total. Monthly payments are higher than PCP for the same car, but you are paying down the full debt. HP can also be simpler to understand: one monthly figure until the car is yours. Use our calculator to see whether the higher HP payment fits your budget and whether the total cost over the term is acceptable to you.

PCP, HP and negative equity when changing car

On PCP, handing back a car worth less than the remaining finance can leave a shortfall. On HP, part-exchanging before the loan is settled can do the same. If a lender agrees to roll that debt into a new agreement, your next monthly payment rises. Use our negative equity car finance calculator UK to see what the combined loan could cost before you choose between PCP and HP on your next car.

Compare car finance offers

See your affordability Check monthly payments See worked examples

Calculators run in your browser and do not store personal details.

Frequently asked questions

What is the main difference between PCP and HP?
With HP, you repay the full amount you borrow over the term and own the car at the end (after any option‑to‑purchase fee). With PCP, a portion of the car's value is left as a balloon / guaranteed future value, so monthly payments are usually lower but you must either pay the balloon, refinance it, or hand the car back at the end.
Does this calculator show my exact lender quote?
No. The calculator is for illustration only. It uses the price, deposit, APR, term and balloon percentage you enter to estimate payments, but it does not include fees and is not a lending offer.
How should I choose between PCP and HP?
HP may suit you if you want to keep the car and prefer to pay more each month but less overall interest. PCP may suit you if you prefer lower monthly payments and are comfortable changing or handing back the car at the end rather than keeping it long term.

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.

Sources

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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