Monthly payment £380. Optional final payment £10,000. Total cost to own £31,256.
On PCP, a £25,000 car with £3,000 down at 9.9% APR is about £380 a month for 48 months. To keep the car you then pay the £10,000 optional final payment — a total of £31,256 to own it, including £6,256 of interest and charges.
How it's made up
| Car price | £25,000.00 |
| Less deposit / part-exchange | −£3,000.00 |
| Amount financed | £22,000.00 |
| 48 monthly payments of £380 | £18,255.60 |
| Optional final payment (balloon) | £10,000.00 |
| Interest & charges | £6,255.60 |
| Total cost to own | £31,255.60 |
PCP keeps monthly payments low because the balloon is left until the end. You still borrow it, so interest is charged on the whole amount financed, balloon included, and you don’t own the car unless you pay the balloon. At the end you can pay it, hand the car back, or use any equity (value above the balloon) as a deposit on the next one.
At the end of a PCP, your choice
You can also part-exchange: if the car is worth more than the £10,000 balloon, that equity can go towards your next deposit. Voluntary termination: under the Consumer Credit Act you can usually hand the car back once you've paid 50% of the total amount payable (about £15,628) — roughly month 34 of 48 here, if it's in good condition.
Worked example: PCP and HP on the same car
A £25,000 car with £3,000 down, at 9.9% APR over 48 months.
| Figure | PCP with a £10,000 final payment | HP |
|---|---|---|
| Monthly payment | £380 | £552 |
| Final payment | £10,000 | — |
| Interest | £6,256 | £4,519 |
| Total cost to own | £31,256 | £29,519 |
PCP's monthly payment is £172 lower, because £10,000 stays borrowed until the end, which adds £1,737 of interest. Only looking at hire purchase? The hire purchase calculator covers HP on its own, including when you can hand the car back.
PCP vs HP on these figures
| Monthly | Total to own | |
|---|---|---|
| PCP · you | £380 | £31,256 |
| HP | £552 | £29,519 |
PCP keeps the monthly payment lower because the balloon is left until the end, but you don't own the car unless you pay it. HP costs more each month with no balloon — the car is yours at the end. On these figures PCP costs £1,737 more to own, because interest runs on the balloon for the whole term. PCP gives flexibility, HP gives certainty. New to this? Read PCP vs HP explained. Only interested in HP, or in HP with a final payment? The hire purchase calculator also shows when you can hand the car back. Considering a personal loan to buy the car outright instead? Compare the cost with the loan calculator.
Frequently asked questions
What is the difference between PCP and HP?
With HP (Hire Purchase) you finance the whole car price minus your deposit and pay it off over the term — you own the car once the last payment clears. With PCP (Personal Contract Purchase) the monthly payments pay off the amount borrowed down to a guaranteed future value (the balloon), plus interest on the whole amount, balloon included; at the end you pay the balloon to own it, hand it back, or part-exchange. PCP monthly payments are lower, but you don’t own the car unless you pay the balloon.
What is a balloon payment (GMFV)?
On PCP, the Guaranteed Minimum Future Value is the lender’s prediction of what the car will be worth at the end of the deal. Your monthly payments bring the balance down to this figure, and you only pay it (the “balloon”) if you choose to keep the car.
Does a bigger deposit reduce my payments?
Yes. A larger deposit (including any part-exchange value) reduces the amount financed, so both the monthly payment and the total interest fall. Some deals also offer a deposit contribution from the dealer or manufacturer.
Is 0% car finance really free?
A genuine 0% APR deal has no interest, so you only repay the cash price spread over the term. But check the cash price isn’t inflated and that you’re not giving up a discount available to cash buyers — sometimes paying cash and haggling beats 0% finance.
Can I hand a PCP car back early?
Under the Consumer Credit Act you have the right to “voluntary termination” once you’ve paid 50% of the total amount payable (including the balloon). If you’ve paid less, you can pay the difference up to the 50% mark and hand it back, subject to it being in good condition.
Related calculators & guides
Sources & guidance
Last reviewed June 2026 against official rates · How we calculate →
An illustration based on the figures you enter, assuming a fixed APR and equal monthly payments. Real agreements may include an arrangement or option-to-purchase fee, mileage limits and excess-mileage/damage charges on PCP, and the rate you're offered depends on your circumstances. This is not a finance offer or financial advice.