PCP and HP solve two different ownership questions
PCP monthly payments cover the financed value excluding the amount deferred to the optional final payment, plus interest and charges. At the end, you can normally return the car, pay the final amount to keep it or use available equity in another transaction, subject to the contract.
HP spreads repayment of the financed vehicle price across the term. Monthly payments are therefore often higher, but ownership normally follows after the final required payment and purchase fee.
| Question | PCP | HP |
|---|---|---|
| Monthly payment | Usually lower due to the deferred balloon | Usually higher because more principal is repaid |
| Ownership | Optional after paying the final amount | Usually follows the final contractual payment |
| Mileage | Agreed limit matters if the car is returned | No return mileage limit in the usual ownership route |
How the PCP and HP repayments are calculated
HP normally finances the vehicle price left after the deposit and spreads repayment across the term with interest. PCP also uses a deposit, APR and term, but defers the optional final payment. That deferred amount usually lowers the monthly repayment without making the vehicle cheaper to own automatically.
Include the balloon only when comparing the cost of keeping the PCP car. A return calculation answers a different question.
Using the PCP or HP calculator for a used car
Enter the used car's actual cash price and copy every number from the written finance illustration. Do not reuse an APR, balloon payment or deposit from a new-car promotion. Used-car PCP may have a different term and optional final payment because age and projected mileage affect the value expected at the end.
Check warranty cover, servicing needs and expected repair costs separately. The calculator compares finance contracts; it does not treat a lower used-car price as proof that the complete ownership cost will be lower.
How to compare two finance illustrations correctly
Enter each deposit, contribution, APR, term and fee exactly as shown. For PCP, add the Guaranteed Minimum Future Value or optional final payment. Compare the PCP return total with the cost of access, and the PCP keep total with HP if the goal is ownership.
Which option fits which goal?
PCP can suit drivers who value a lower monthly commitment and expect to change vehicles regularly, provided the mileage and condition rules are realistic. HP can suit buyers who want a clear route to ownership and can support the higher payment.
Neither agreement makes insurance, fuel, servicing or tyres disappear. Add the winning finance option to the total car cost calculator before deciding. For a broader purchase-versus-lease comparison, use the lease vs buy calculator.
Sources and checks
AutoPrisme uses the figures you enter. The links below explain the rule, market context or consumer protections used to frame this calculator. Always verify the numbers in your own quote or contract.
- MoneyHelper — Buying a car with PCPUK guidance on deposits, monthly payments, balloon payments, mileage and end-of-contract choices.
- MoneyHelper — Buying a car with Hire PurchaseUK guidance on HP payments, ownership and contractual limitations.
- MoneySuperMarket — PCP vs HP car finance calculatorA current example of UK demand for side-by-side monthly, interest and total-cost comparisons.
Frequently asked questions
Why is the PCP monthly payment usually lower than HP?
PCP defers a large part of the vehicle value to the optional final payment. HP monthly payments normally repay the full financed balance across the agreement, so you own the car after the final contractual payment.
Do I own the car at the end of PCP?
Not automatically. You normally need to pay the optional final or balloon payment, plus any option-to-purchase fee, to keep it. Otherwise you may return the car subject to mileage and condition terms or use any equity toward another agreement.
Do I own the car at the end of HP?
Usually yes after all required payments and any purchase fee have been made. Read the individual agreement because ownership and early-settlement terms are contractual.
Does this calculator include excess mileage or damage charges?
No. Add expected return charges to the PCP fees field if you want them reflected in the result. Use the pence-per-mile rate and your realistic mileage, then inspect the fair wear and tear standard.
Can I use the PCP calculator for a used car?
Yes. Enter the used car cash price and every figure from the written PCP illustration, including deposit, APR, term, fees and optional final payment. The calculation method is the same, but used-car rates and guaranteed future values can differ from new-car offers.
How are HP repayments calculated?
The calculator uses the cash price, deposit, APR, term and fees to estimate an amortising monthly repayment. Compare the result with the lender's written HP quote because payment timing, fees and contractual rounding may create a small difference.
Is this an HP quote or a finance approval?
No. It is an independent estimate for comparing scenarios. Only a lender or broker can provide a personalised quotation, eligibility decision and contractual repayment schedule.