Car finance is notoriously confusing. Dealerships often focus entirely on the "monthly payment" while hiding the true overall cost of the vehicle and the high interest rates they are charging.
Our free car finance calculator helps you cut through the dealership jargon. You can calculate the exact monthly cost and total interest for both Hire Purchase (HP) and Personal Contract Purchase (PCP) agreements.
Car Finance Calculator
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HP vs PCP: What is the difference?
Hire Purchase (HP): You pay a deposit, and then pay off the entire remaining value of the car plus interest in equal monthly instalments. At the end of the term, you own the car outright. Monthly payments are higher, but you pay less interest overall.
Personal Contract Purchase (PCP): You pay a deposit, and then make monthly payments that only cover the depreciation of the car's value, plus interest. Because you are not paying off the full value of the car, monthly payments are lower. However, at the end of the term, you do not own the car. You must either hand it back, trade it in for a new one, or pay a large final "balloon payment" to buy it outright.
Always check your credit score before applying for car finance. A better score will secure a lower APR, which can save you thousands of pounds over a 4-year agreement.