This calculator is for car finance in the United Kingdom, where most new cars are bought on hire purchase (HP) or personal contract purchase (PCP), and prices already include VAT. Both are loans secured on the car: you own it only after the last payment.
HP and PCP
- HP: the whole amount of credit is repaid in equal monthly payments. After the last one, the car is yours.
- PCP: part of the credit, the final or “balloon” payment, is left until the end. Monthly payments are lower, and at the end you can pay the balloon to keep the car, hand it back, or part-exchange it. Handing it back usually depends on the car’s condition and mileage.
How it is calculated
- Monthly rate = (1 + APR)1/12 − 1, because a UK APR is an annual rate under the FCA rules.
- Monthly payment = (credit − balloon ÷ (1 + monthly rate)months) × monthly rate ÷ (1 − (1 + monthly rate)−months).
- Total amount payable = deposit + monthly payments + balloon.
Example
A £20,000 car with a £2,000 deposit on HP over 48 months at 9.9% APR: you borrow £18,000 and pay about £452 a month, £23,697 in total. On PCP with an £8,000 balloon, the monthly payment falls to about £314. The total rises to £25,087, because the balloon is borrowed for the whole term. The US auto loan calculator covers US loans with sales tax.
Voluntary termination
Under sections 99 and 100 of the Consumer Credit Act 1974, you can end a regulated HP or PCP agreement early and hand the car back once you have paid half of the total price, which includes the deposit and any final payment. On PCP the balloon makes that point come later. Arrears or damage to the car can add costs; read your agreement and ask the lender for a settlement figure.
Frequently asked questions
What is better, PCP or HP?
HP costs less in total and the car is yours at the end. PCP has lower monthly payments and more choice at the end, but you pay interest on the balloon for the whole term, so it costs more if you keep the car. In the example on this page, PCP is about £138 a month cheaper but £1,390 more in total.
How do you calculate PCP?
Take the price minus the deposit, set aside the final balloon payment, and spread the rest plus interest on the whole amount over the term. The formula is in the section above; enter your quote’s balloon and APR to get the monthly payment.
How much is car finance per month in the UK?
It depends on the amount, term and APR. At 9.9% APR on HP, £10,000 over 48 months costs about £251 a month and £20,000 about £502. The table on this page lists other amounts and terms.
Should I do a 48 or 60 month car loan?
A longer term lowers the monthly payment but adds interest. At 9.9% APR, £18,000 over 48 months costs about £452 a month and £3,697 in interest; over 60 months about £378 a month and £4,670 in interest.
Sources
- Consumer Credit Act 1974, section 99: Right to terminate hire-purchase etc. agreements
- Consumer Credit Act 1974, section 100: Liability of debtor on termination
- FCA Handbook, CONC App 1.2: Total charge for credit and APR
- Bank of England: Effective interest rates, August 2026
By Calcelate Team. Formula from the sources above.
- 2026-10-06 · Formula and texts checked