Estimate your monthly payment
- FCA regulated
- No obligation
- Free to check
- ProductsHP + PCP
- Term24 – 60 months
- Deposit£0 – 20%
- Credit searchNone to calculate
- Not a quoteIllustrative only
How is a car finance monthly payment calculated?
Every regulated UK car finance agreement uses the same underlying amortisation maths. The lender takes the cash price of the car, subtracts your deposit and any part-exchange value, and the remainder is the amount of credit. Interest is charged on the outstanding balance each month, and the payment is set at the level that clears the balance — plus interest — by the end of the term.
On (A car finance product where you pay a fixed monthly amount and own the car outright at the end of the term.) (HP) the balance is cleared to zero, so the payment is higher and you own the car at the end. On (A car finance product with lower monthly payments and a large optional final payment (the balloon) if you want to keep the car.) (PCP) part of the balance is deferred as a (The minimum value the lender guarantees your car will be worth at the end of a PCP agreement, based on agreed mileage and condition.), often called the balloon or optional final payment. You only pay interest on that deferred amount during the term, which is why the monthly is lower — but the balance is still there at the end waiting for a decision.
- Amount of credit = cash price − deposit − part-exchange equity.
- APR includes the interest rate plus most compulsory fees, which is why it is the fair comparison figure.
- Term is the number of monthly payments, usually 24 to 60 months in UK motor finance.
- On PCP the balloon is set by the lender from predicted mileage, age and residual value — not by you.
What changes the number most?
| Lever | Effect on monthly | Effect on total cost |
|---|---|---|
| Bigger deposit | Lower | Lower — you borrow less and pay less interest |
| Longer term | Lower | Higher — more months of interest |
| Lower APR | Lower | Lower |
| Switching HP to PCP | Lower | Usually higher unless you hand the car back |
| Cheaper car | Lower | Lower on every measure, including insurance and tax |
A worked example
| Structure | Monthly | Term | End of term |
|---|---|---|---|
| HP over 36 months | £487 | 36 | You own the car |
| HP over 48 months | £387 | 48 | You own the car |
| HP over 60 months | £328 | 60 | You own the car |
| PCP over 48 months (balloon £5,200) | £279 | 48 | Pay balloon, refinance, or hand back |
What APR should I put in?
If you already hold a written quote, use the (Annual Percentage Rate — the yearly cost of borrowing including interest and standard fees, used to compare finance offers on a like-for-like basis.) on it — that is the only accurate number available to you. If you are planning rather than comparing quotes, use a (The APR at least 51% of accepted customers are offered. Yours can be higher depending on the lender's assessment of your file.) that matches your credit profile honestly. Entering a prime rate when your file has recent missed payments produces a comforting figure that no lender will ever match, and that is how people end up disappointed at the dealership.
Common mistakes with payment calculators
- Budgeting to the last pound of what you can afford, leaving nothing for insurance, tax, servicing and tyres.
- Comparing an HP payment against a PCP payment and calling PCP cheaper — the balloon is still owed.
- Ignoring the option-to-purchase fee and documentation fees, which sit inside APR but not inside a bare interest calculation.
- Choosing 60 months for the payment and then changing car at 36 months, when negative equity is at its worst.
- Assuming the advertised rate is the rate you will be given before any search has been run.
After the calculator: what to do next
- Sanity-check the running costs too — insurance, VED, fuel and servicing typically add a third again on top of the finance payment.
- Compare the same car on HP and PCP so the end-of-term position is a decision, not a surprise.
- Run a soft-search eligibility check so the APR you plan around is grounded in a real lender view.
- Only then agree a car and a price with the dealer — with a number you already know is affordable.
Sources
- MoneyHelper · Car finance — working out what you can afford · 1 September 2024
- FCA · Motor finance — consumer information · 1 November 2024
- GOV.UK · Vehicle tax rate tables · 1 April 2025
Common questions
Is the calculator result a quote?
No. It is an illustrative estimate based on the figures you enter. Your actual payment depends on the lender's decision, the vehicle and your credit profile.Does using the calculator affect my credit score?
No. Nothing you type is sent to a lender and no credit search of any kind is performed. Even the eligibility check that follows is a soft search, which only you can see.Why is my PCP payment so much lower than HP?
Because part of the balance is deferred to the end as a balloon payment. You are financing less of the car during the term, so the monthly is lower, but that deferred amount is still owed if you want to keep the car.What term should I choose?
The shortest term whose payment you can comfortably afford. Longer terms feel cheaper monthly but cost more in total interest and keep you in negative equity for longer.Should I put down the biggest deposit I can?
Usually yes for cost, but never at the expense of your emergency savings. A deposit that empties your buffer often costs more when something breaks and goes on a credit card.Do fees change the monthly payment?
Documentation and option-to-purchase fees are usually charged separately or added to the final payment rather than spread. They are reflected in APR, which is why APR is the fair comparison figure.Can I get finance with no deposit?
Yes, no-deposit finance is widely available. The monthly is higher and you start with less equity, but it does not stop an application succeeding.Can I settle the agreement early?
Yes. Under the Consumer Credit Act you can request a settlement figure at any time, and early settlement typically includes an interest rebate.
Check what you'd be offered — no impact on your credit score.
Real people, straight answers. Talk to us before you apply if you want to.
People also ask
Do I own the car with hire purchase?
You own the car outright once the final monthly payment clears. During the term the finance company is the legal owner, which is why you can't sell it mid-agreement without settling it first.
Is there a mileage limit on HP?
No. Unlike PCP and leasing, hire purchase has no annual mileage limit, which is why HP suits high-mileage drivers.
What is the balloon payment on PCP?
The balloon — properly called the Guaranteed Future Value (GFV) — is the optional final payment that lets you own the car outright at the end. It's set by the lender at the start of the agreement based on the car's forecast value at that point.
What happens if the car is worth less than the balloon?
You simply hand it back. The 'guaranteed' in GFV means the lender takes that price risk, not you — provided the car is in fair condition and within the agreed mileage.
Related reading
Hire Purchase car finance
Own the car at the end, no mileage limits, fixed monthly payments. HP explained honestly by real UK car finance brokers — apply or ask first.
PCP car finance explained
Personal Contract Purchase, honestly explained — the balloon payment, mileage limits, end-of-term options and the real total cost vs HP.
HP vs PCP comparison tool
Compare HP and PCP on the same car: monthly payment, total cost, mileage limits and what happens at the end. Illustrative UK examples.