PCP Calculator UK | Car Finance & Early Settlement

  • Adam
  • November 13, 2025

Free PCP car finance calculator: estimate monthly payments, balloon payments & early settlement. Check voluntary termination eligibility. UK rates & examples.

PCP Calculator – Car Finance & Early Settlement Calculator UK

The PCP calculator (Personal Contract Purchase calculator) helps UK car buyers estimate monthly payments, total costs, and balloon payments for PCP car finance deals. Calculate your PCP finance with deposit, interest rate, term, and mileage allowance, or use the early settlement calculator to determine voluntary termination eligibility and payoff amounts. Whether you're financing a new or used car, this comprehensive PCP car finance calculator provides accurate projections based on current UK market rates and regulations.

🚗 PCP Car Finance Calculator

Calculate monthly payments and total costs

On-the-road price of the car
Typical: 10% of car price
Typical UK PCP rates: 5-9%
Contract length
Affects balloon payment value
% of car price (GMFV)

Your PCP Finance Breakdown

Monthly Payment
£0
Balloon Payment
£0
Total Interest
£0
Total Cost (if buying)
£0

Detailed PCP Breakdown

Item Amount
Car Price £0
Deposit Paid £0
Amount Financed £0
Balloon Payment (GMFV) £0
Amount to Finance Monthly £0
Monthly Payment £0
Total Monthly Payments (×36) £0
Total Interest Charged £0
Total if Buying Car £0

Your Options at End of Contract

  • Pay balloon & keep car: Pay £0 to own the vehicle
  • Return the car: Hand back keys with nothing more to pay (subject to condition & mileage)
  • Part-exchange: Use any equity above balloon payment as deposit on new car

⚖️ PCP Early Settlement Calculator

Check voluntary termination eligibility

From your PCP agreement (including balloon)
Your monthly payment amount
Number of monthly payments completed
Deposit at start of agreement

Your Early Settlement Analysis

Amount Paid So Far
£0
50% Threshold
£0
Amount to 50%
£0
Eligibility Status
-

What is PCP Car Finance?

Personal Contract Purchase (PCP) is the most popular form of car finance in the UK, accounting for over 80% of new car finance deals. PCP allows you to drive a new or used car by paying a deposit, followed by fixed monthly payments over 2-4 years, with a final optional balloon payment if you want to own the car.

How PCP Works: The Three-Stage Process

  • Stage 1 - Deposit: Pay an initial deposit (typically 10% of car price, but can be more or less)
  • Stage 2 - Monthly Payments: Make fixed monthly payments covering the car's depreciation plus interest for 24-48 months
  • Stage 3 - End Options: Choose to pay the balloon payment and keep the car, return it with nothing more to pay, or part-exchange for a new car

Key PCP Feature: Unlike Hire Purchase (HP), PCP monthly payments are lower because you're only financing the depreciation (difference between purchase price and guaranteed future value), not the entire car value. The balloon payment covers the remaining value.

PCP Calculation Formulas

Understanding the mathematics behind PCP helps you verify dealer quotes and make informed decisions:

Amount to Finance Monthly

Depreciation Amount Formula:

D = (P - Dep - B)

Where:

  • D = Depreciation amount to finance
  • P = Car purchase price
  • Dep = Deposit paid
  • B = Balloon payment (GMFV)

Monthly Payment Calculation

PCP Monthly Payment Formula:

M = [D × r(1+r)^n] / [(1+r)^n - 1] + [B × r]

Where:

  • M = Monthly payment
  • D = Depreciation amount
  • B = Balloon payment
  • r = Monthly interest rate (APR ÷ 12)
  • n = Number of monthly payments

Balloon Payment (GMFV)

Guaranteed Minimum Future Value:

GMFV = P × (Balloon % ÷ 100)

Typically 30-50% of original car price depending on mileage and term

Example PCP Calculation:

Car Price: £25,000 | Deposit: £2,500 | APR: 6.9% | Term: 36 months | Balloon: 40% (£10,000)

Step 1: Amount financed = £25,000 - £2,500 = £22,500

Step 2: Depreciation to finance = £22,500 - £10,000 = £12,500

Step 3: Monthly rate = 6.9% ÷ 12 = 0.575%

Step 4: Monthly payment ≈ £385 (depreciation) + £48 (interest on balloon) = £433/month

Total Cost if Buying: £2,500 deposit + (£433 × 36) + £10,000 balloon = £28,088

Total Interest: £28,088 - £25,000 = £3,088

PCP vs HP vs Lease: Which is Best?

Feature PCP (Personal Contract Purchase) HP (Hire Purchase) PCH (Lease)
Monthly Payments Lower (depreciation only) Higher (full value) Similar to PCP
Ownership Optional (pay balloon) Automatic after final payment Never (always return)
Flexibility High (3 options at end) Low (must keep paying) Medium (return car)
Mileage Limits Yes (excess charges) No limits Yes (strict limits)
Condition Requirements Fair wear & tear No requirements Strict (charges for damage)
Early Exit Voluntary termination at 50% Voluntary termination at 50% Difficult/expensive
Modifications Not allowed Allowed (you own it) Not allowed
Deposit Usually required (10%) Usually required (10%) Multiple months upfront

PCP Early Settlement and Voluntary Termination

UK law provides consumer protections allowing you to exit PCP agreements early:

Voluntary Termination (VT) at 50%

Under the Consumer Credit Act 1974, you can voluntarily terminate your PCP agreement once you've paid 50% of the total amount payable (including the balloon payment) without paying the remaining balance.

Voluntary Termination Requirements

  • 50% Threshold: Must have paid at least 50% of total amount payable
  • Good Condition: Car must be returned in good condition (fair wear and tear accepted)
  • Mileage: May still owe excess mileage charges
  • Damage: Charges apply for damage beyond fair wear and tear
  • Written Notice: Must notify lender in writing of intention to terminate

Early Settlement (Before 50%)

If you haven't reached 50%, you can still settle early by paying:

  • All remaining monthly payments
  • The balloon payment
  • Any early settlement fees
  • Minus a small rebate for future interest (typically minimal)

⚠️ Early Settlement Reality: Early settlement rarely makes financial sense unless you're selling the car privately for more than the settlement figure. The settlement amount is usually close to the full cost of the agreement with only a small rebate. Voluntary termination at 50% is almost always the better option if you want to exit early.

PCP Advantages and Disadvantages

Advantages of PCP Finance

  • Lower Monthly Payments: 20-40% lower than HP because you're not financing full car value
  • Flexibility: Three options at end—buy, return, or trade-in for new car
  • Drive Newer Cars: Ability to upgrade to new car every 2-4 years
  • Fixed Payments: Budget certainty with fixed monthly cost
  • Manufacturer Warranties: Often covered for entire PCP term on new cars
  • Guaranteed Future Value: Protected from excessive depreciation—car value guaranteed
  • No Depreciation Risk: Hand back car if worth less than balloon payment
  • Voluntary Termination Rights: Exit option at 50% paid

Disadvantages of PCP Finance

  • Never-Ending Payments: If you keep upgrading, you're always in finance
  • Mileage Restrictions: Typically 6,000-15,000 miles/year; excess charges 5-20p per mile
  • Condition Requirements: Must maintain car to dealer standards
  • No Ownership Until Balloon Paid: Don't own car during agreement
  • High Total Cost: More expensive than buying cash or HP over time
  • Large Balloon Payment: Need £5,000-£15,000+ to buy car at end
  • Interest on Balloon: Pay interest on balloon amount even though you haven't borrowed it yet
  • Negative Equity Risk: If car damaged/high mileage, may be worth less than balloon

Typical PCP Interest Rates UK (2025)

PCP APRs vary significantly based on credit score, lender, and whether buying new or used:

New Car PCP Rates

  • Manufacturer Finance (Prime): 3.9-6.9% APR
  • Manufacturer Finance (Standard): 6.9-9.9% APR
  • Bank/Finance Company (Good Credit): 7.9-10.9% APR
  • Bank/Finance Company (Fair Credit): 10.9-14.9% APR

Used Car PCP Rates

  • Nearly New (1-2 years): 6.9-9.9% APR
  • Used (3-5 years): 8.9-12.9% APR
  • Older Used (5+ years): 12.9-16.9% APR

Rate Impact on Costs: On a £25,000 car over 36 months with £10,000 balloon:

  • At 4.9% APR: £395/month | Total interest: £2,220
  • At 6.9% APR: £433/month | Total interest: £3,088
  • At 9.9% APR: £476/month | Total interest: £4,136

A 5% rate difference costs £81/month more or £2,916 extra over 3 years.

Frequently Asked Questions

How is PCP monthly payment calculated?
PCP monthly payments are calculated by financing the depreciation (car price minus deposit minus balloon payment) plus interest on both the depreciation and the balloon payment. Formula: M = [D × r(1+r)^n] / [(1+r)^n - 1] + [B × r], where D is depreciation amount, B is balloon payment, r is monthly interest rate, and n is number of payments. This differs from HP where you finance the full car value. Example: £25,000 car with £2,500 deposit, £10,000 balloon at 6.9% over 36 months = £433/month.
What happens at the end of a PCP agreement?
You have three options at PCP end: 1) Pay the balloon payment (GMFV) and keep the car—you own it outright, 2) Return the car with nothing more to pay (assuming good condition and within mileage limit), or 3) Part-exchange for a new car—use any equity (car value above balloon payment) as deposit on next PCP deal. Most people (60%+) either return or part-exchange rather than pay balloon, starting a new PCP cycle.
Can I settle my PCP early?
Yes, through two methods: 1) Voluntary Termination (VT)—if you've paid 50% of total amount payable, you can return car with no further payments (subject to condition and mileage), or 2) Early Settlement—pay settlement figure (all remaining payments plus balloon minus small interest rebate) to own car or sell it. VT is usually better option as you avoid paying remaining 50%. Contact lender for exact settlement figure, which is typically valid for 30 days.
What is the balloon payment on PCP?
The balloon payment (also called GMFV - Guaranteed Minimum Future Value or optional final payment) is a lump sum due at end of PCP if you want to own the car. It's set at start based on predicted car value after depreciation—typically 30-50% of original price depending on mileage allowance and term length. Example: £25,000 car with 40% balloon = £10,000 final payment. Lower mileage limits allow higher balloon percentages. You're not required to pay it—can return car instead.
Is PCP cheaper than buying a car outright?
No, PCP is more expensive than buying cash due to interest charges. Example: £25,000 car bought with cash costs £25,000. Same car on PCP with £2,500 deposit, £433/month for 36 months, and £10,000 balloon costs £28,088 total (£3,088 in interest). However, PCP benefits include: lower monthly outgoings (preserving cash), flexibility to return car, protection from depreciation, and ability to drive newer car than you could afford to buy outright. It's about cash flow management vs. total cost.
What are PCP mileage limits and excess charges?
PCP agreements include annual mileage limits (typically 6,000-15,000 miles/year) that determine balloon payment value. Higher mileage = lower balloon = higher monthly payments. If you exceed limit when returning car, you pay excess mileage charges: typically 5-20p per mile depending on car value. Example: 10,000 mile annual limit over 3 years = 30,000 total. If you've driven 33,000 miles, you owe 3,000 × 10p = £300 excess. No charges if you pay balloon and keep car. Set realistic mileage estimate to avoid penalties.
Can I modify a car on PCP finance?
No, you cannot permanently modify a car on PCP finance because you don't own it—the finance company does. Prohibited modifications include: body kits, engine tuning, suspension changes, exhaust modifications, permanent interior alterations, or anything that changes car's specification. Allowed: reversible accessories like phone mounts, dash cams, seat covers. If returning car, it must be in original specification. If you pay balloon and keep car, you can then modify it freely. Violating this may result in charges or rejection when returning vehicle.

Tips for Getting the Best PCP Deal

Maximize value and minimize cost with these strategies:

Before Signing PCP Agreement

  • Shop Around: Compare manufacturer finance, banks, and independent finance companies—rates vary significantly
  • Negotiate Car Price: Lower car price reduces deposit and monthly payments more than negotiating APR
  • Maximize Deposit: Larger deposit (15-20%) significantly reduces monthly payments
  • Choose Realistic Mileage: Underestimating costs you later; overestimating raises monthly payments unnecessarily
  • Check Total Cost: Focus on total amount payable, not just monthly payment
  • Read Small Print: Understand condition requirements, excess mileage charges, and early termination terms

During PCP Agreement

  • Maintain Service History: Full dealer service history protects car value
  • Stay Within Mileage: Track mileage regularly to avoid expensive overage charges
  • Fix Minor Damage: Repair small scratches/dents before return—cheaper than dealer charges
  • Consider Gap Insurance: Covers difference between insurance payout and settlement figure if car totaled

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