Find the true cost of financing your next car
Compare lease, PCP, HP and personal loan side by side
I built this calculator because I wanted a simpler way to view different finance options side-by-side, taking into account things like initial deposits and end-of-term options, rather than just the initial monthly payment. It really helped me get a clearer grasp of the overall commitment, and I wanted to share it with you too!
Please note, this calculator is an illustrative tool for illustrative and educational comparison purposes only and does not constitute financial advice. Always check the exact terms with your lender before making a decision
What do you want to compare?
Choose your comparison mode — you can switch at any time.
Select the options you want to compare — click a button below to add it and fill in your quote.
(PCH)
You pay monthly to use the car, then hand it back. Like renting long-term.
Personal Contract Purchase
Lower monthly payments. At the end, choose to own, hand back or part-ex.
(HP)
Fixed monthly payments. Car is yours automatically at the end of the term.
Bank / Lender
Borrow what you need from a bank and pay the rest as a cash deposit. Own the car immediately with no restrictions.
If this tool helped you make sense of your options, a coffee would be very much appreciated!
☕ Buy me a coffeeThe advertised monthly payment is only part of the story. Here’s what each option actually costs you per month when everything is included.
- Typically lowest monthly payments for new cars
- Drive a new car regularly — upgrade every 2–4 years
- Insulated from unexpected market depreciation risk
- Optional maintenance packages widely available
- No path to vehicle ownership through standard terms
- Contractual mileage limits apply with excess charges
- Potential fees for damage beyond fair wear and tear
- Early termination can be costly and structured
- Lower monthly payments than HP on an identical car
- Three options at end: buy, return or part-exchange
- Protected from worse-than-expected market drops
- Suits drivers looking to update vehicles regularly
- Requires a large final balloon payment to own the car
- Agreed mileage limits apply if you choose to return it
- Total interest cost can be higher due to deferred value
- Vehicle remains lender property until final payment
- Own the car outright at the end — no balloon payment
- No contractual mileage restrictions
- Simple and easy to understand structure
- Lenders may show more flexibility with approvals
- Higher monthly payments than equivalent PCP or lease
- You absorb the long-term depreciation value loss
- Lender owns vehicle until final payment completes
- Cannot sell or modify without lender coordination
- Own the car completely from day one
- No vehicle mileage limits or dealer restrictions
- Free to sell, modify or trade at your discretion
- Fixed monthly repayments directly to your provider
- The lowest advertised rates require a strong credit score
- Higher monthly payments since no value is deferred
- You absorb the vehicle’s full depreciation risk
- Excludes specific manufacturer finance incentives
Your complete guide to car finance in the UK
Understanding the difference between lease, PCP, HP and personal loans can help you make a more informed decision. Here’s a general overview of how each product works — always verify details with your lender or an independent adviser before committing.
What is personal contract hire (leasing)?
Personal Contract Hire (PCH), also known as personal leasing, is essentially a long-term car rental. You pay an initial rental (usually equivalent to 3–9 monthly payments), followed by fixed monthly payments for the agreed term — typically 24, 36 or 48 months.
At the end of the contract, you simply hand the car back to the dealer or leasing company. There is no option to purchase the vehicle. Because you’re effectively paying for the car’s expected depreciation during the contract rather than its full value, monthly payments are often lower than financing to own a new vehicle.
- Mileage limits typically 8,000–15,000 per year
- Excess mileage charged at 5–15p per mile
- Maintenance packages available as optional add-ons
- GAP insurance relevance depends on policy conditions
What is PCP finance?
Personal Contract Purchase (PCP) is one of the UK’s most common car finance options. You pay a deposit, then lower monthly payments over a set term. These payments only cover part of the car’s value — specifically the amount the car is expected to lose during your contract, plus interest.
At the end of the term, you typically have three choices: pay the final balloon payment (the Guaranteed Minimum Future Value or GMFV) to buy the car, hand the car back with nothing more to pay (subject to mileage and condition), or use any remaining positive equity as a deposit on another deal.
- Balloon payment typically 30–50% of original car price
- GMFV is fixed and determined by the lender at the start
- Mileage limits apply if you plan to return the vehicle
- May benefit from Section 75 Consumer Credit Act protection — seek advice for your situation
What is hire purchase (HP)?
Hire Purchase is a straightforward car finance option. You pay a deposit (often around 10% of the car’s value) followed by fixed monthly payments over an agreed term. Unlike PCP, there is no large balloon payment at the end — the car automatically becomes yours once all contractual payments are settled.
Because you’re spreading the full remaining cost (minus deposit) over the term with no deferred payment, monthly costs are higher than PCP for an identical vehicle. However, many people prefer the simplicity of knowing exactly when they’ll own the car with no further choices required.
- No vehicle mileage limits — drive as far as you like
- Car remains legal property of the lender until final payment settles
- Lender may be entitled to repossess if terms are breached
- Voluntary termination: potential right to end after 50% is paid under the Consumer Credit Act
What is a personal loan for a car?
Taking out an unsecured personal loan from a bank, building society or lender is a traditional way to finance a car. You borrow the full amount you need and repay it in fixed monthly instalments over an agreed term, usually 1–7 years. The car is yours from day one.
The rate you’re offered depends heavily on your credit profile and borrowing history. The lowest advertised representative APRs are typically available to applicants with excellent credit scores. Because the loan is not secured against the asset, the lender generally cannot directly repossess the vehicle if you fall behind — though default will impact your credit rating and lenders can pursue other standard debt collection recovery options.
- Rates vary significantly by lender and individual credit profiles
- Total loan amount for unsecured borrowing varies by provider
- No contractual restrictions on modifications, mileage or selling
- Some lenders allow overpayments — check terms for potential early repayment fees
What does APR mean in car finance?
APR stands for Annual Percentage Rate. It represents the annual cost of borrowing — including the interest rate and mandatory setup fees — expressed as a yearly percentage. When comparing finance deals, it is helpful to look at the APR rather than just the base interest rate.
Lenders are required to advertise a representative APR, which must be offered to at least 51% of successful applicants. Your personalized rate may differ. A lower APR means less interest paid overall, but it is always recommended to compare the total amount repayable rather than focusing solely on monthly outgoings.
- Representative APR must be shown in qualifying advertising
- Your personal APR may be higher based on your specific credit score
- Compare total amount repayable alongside individual payments
- 0% APR deals mean no interest, but full car value must still be repaid
How does depreciation affect the cost?
Depreciation is the ongoing drop in a car’s market value over time. A typical new car loses value fastest in the first year, and up to half its value over three years. Understanding how each finance type handles depreciation risk is an important part of choosing a deal.
With PCH leasing or returning a PCP car, the finance company handles the risk of unexpected drops in market value. With HP, a personal loan, or a PCP deal where you intend to purchase the vehicle, you absorb that risk. If the vehicle drops in value faster than expected, it affects your overall equity position.
- New cars: expect average depreciation of ~15–25% in year one
- Nearly-new cars typically experience a softer depreciation curve
- Some brands and fuel types hold value better than others
- Electric vehicles can experience varying depreciation curves