Monthly payment £386. Optional final payment £10,000. Total cost to own £31,541.
On PCP, a £25,000 car with £3,000 down at 9.9% APR is about £386 a month for 48 months. To keep the car you then pay the £10,000 optional final payment — a total of £31,541 to own it, including £6,541 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 £386 | £18,541.20 |
| Optional final payment (balloon) | £10,000.00 |
| Interest & charges | £6,541.20 |
| Total cost to own | £31,541.20 |
PCP keeps monthly payments low because you only finance the depreciation, not the whole car — but you don’t own it 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 £15,771) — roughly month 34 of 48 here, if it's in good condition.
PCP vs HP on these figures
| Monthly | Total to own | |
|---|---|---|
| PCP · you | £386 | £31,541 |
| HP | £557 | £29,732 |
PCP keeps the monthly payment lower (you only finance the depreciation), but you don't own the car unless you pay the balloon. HP costs more each month with no balloon — the car is yours at the end. Total cost to own is usually similar; PCP gives flexibility, HP gives certainty. New to this? Read PCP vs HP explained. 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 only cover the car’s depreciation down to a guaranteed future value (the balloon); 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.