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UK Calculators

PCP Finance Calculator

A personal contract purchase keeps the monthly payment low by deferring a large final payment, the guaranteed future value or balloon. You only pay for the depreciation across the term, plus interest on the whole financed amount.

Enter the price, deposit, term, APR and balloon to see the monthly payment, what you pay if you hand the car back, and what it costs in total if you decide to keep it.

Last reviewed

PCP Finance Calculator

Estimated monthly payment

£453.12

Amount financed before the balloon£22,500.00
Final balloon payment (GFV)£10,000.00
Total paid if you return the car£18,812.47
Total paid if you keep the car£28,812.47
Estimated finance cost if you keep it£3,812.47

Mileage and condition charges, the option-to-purchase fee and the lender’s actual guaranteed future value are not included.

Reading the result

Two totals are shown because a PCP has two very different endings. Returning the car means you have paid the deposit, the monthly payments and any upfront fee. Keeping it adds the balloon payment on top.

The finance cost if you keep the car is the interest element: everything paid over and above the amount financed, including any upfront fee.

How it works

The balloon payment is discounted back to today at the monthly rate and subtracted from the amount financed. The monthly payment is then the annuity payment on what is left, which is why the balloon lowers the monthly figure without removing the interest on it.

The formula is payment = (financed − balloon ÷ (1 + r)^n) × r ÷ (1 − (1 + r)^−n), where r is the effective monthly rate. At a zero rate it simplifies to the financed amount minus the balloon, divided by the number of months.

Worked examples

£25,000 car, £2,500 deposit, £10,000 balloon over three years

A 7.9% APR agreement with no dealer contribution and no fee.

  1. Subtract the £2,500 deposit for £22,500 financed.
  2. Discount the £10,000 balloon back over 36 months at the effective monthly rate.
  3. Spread the remainder across 36 payments.

A monthly payment in the region of £400, with £10,000 still to settle if you keep the car.

The default scenario on this page

Cash price of the vehicle (£): 25000; Customer deposit (£): 2500; Manufacturer or dealer contribution (£): 0; APR (%): 7.9; Term (months): 36; Final balloon payment / GFV (£): 10000; Upfront fee (£): 0

  1. The balloon payment is discounted back to today at the monthly rate and subtracted from the amount financed. The monthly payment is then the annuity payment on what is left, which is why the balloon lowers the monthly figure without removing the interest on it.
  2. Amount financed before the balloon: £22,500.00
  3. Final balloon payment (GFV): £10,000.00
  4. Total paid if you return the car: £18,812.47
  5. Total paid if you keep the car: £28,812.47
  6. Estimated finance cost if you keep it: £3,812.47

Estimated monthly payment: £453.12

Assumptions

The result depends on the following. If any of them do not match your situation, treat the figure as indicative only.

  • The balloon payment is fixed at the amount you enter and is payable at the end of the term.
  • The entered APR is treated as an effective annual rate, converted to a monthly rate for the calculation.
  • A manufacturer or dealer contribution reduces the amount financed in the same way as a deposit, but is not money you have paid.

What this calculator does not do

  • Excess mileage charges, damage and condition charges, and the option-to-purchase fee charged at the end of most agreements are not included.
  • The lender sets the guaranteed future value using its own residual forecast. The figure you enter is your estimate of it.
  • Voluntary termination rights, early settlement figures and equity positions at the end of the term are outside the scope of this calculator.

Methodology

A present-value annuity with a future lump sum, solved directly rather than by iteration, so the same inputs always give the same result.

Validation rejects a balloon larger than the amount financed, which would otherwise produce a negative monthly payment.

Frequently asked questions

Do I own the car at the end of a PCP?

Only if you pay the balloon, usually with a small option-to-purchase fee. Otherwise you can return the car within the mileage and condition terms, or part-exchange any equity into a new agreement.

Why is PCP cheaper each month than hire purchase?

Because you are not repaying the balloon during the term, only the depreciation and the interest. The money is deferred, not saved, which is why the total if you keep the car is higher.

What is negative equity on a PCP?

If the car is worth less than the balloon at the end, you simply return it, which is the point of a guaranteed value. It matters only if you want to part-exchange early.

Please note: Results are estimates for general information only and are not financial, tax or legal advice. Figures depend on the assumptions listed on each page and on your personal circumstances.

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