PCP vs HP on a £30,000 car
The PCP payment looks £215 lower each month, but £12,000 remains at the end. This example shows why monthly payment alone cannot identify the cheaper route.
Result under these assumptions: HP costs about £34,413 in total. PCP costs about £36,113 if the balloon is paid and the car is kept—approximately £1,700 more.
Assumptions
Illustrative figures only. Real quotations can use different rates, fees, deposits and payment conventions.
Payment comparison
| PCP — keep the car | HP | |
|---|---|---|
| Deposit | £3,000 | £3,000 |
| Monthly payment | £439.85 | £654.44 |
| Final payment | £12,000 | £0 |
| Total paid | £36,112.97 | £34,413.09 |
| Finance cost above cash price | £6,112.97 | £4,413.09 |
Monthly payments are displayed to the nearest penny. Totals use the unrounded calculated payment, so multiplying the displayed monthly figure can differ by a few pence.
Why PCP is dearer here
Both methods finance £27,000 after the deposit. HP steadily repays that amount to zero. PCP leaves £12,000 outstanding throughout most of the agreement, so interest is charged while a larger balance remains. The lower monthly payment is created by deferring principal—not by making it disappear.
If the car were worth £15,000 after four years, estimated ownership cost would be approximately £21,113 for PCP and £19,413 for HP after deducting that same retained car value.
What could change the answer?
- A manufacturer deposit contribution available only with PCP.
- Different effective rates or quoted monthly payments.
- Option-to-purchase and administration fees.
- Returning the PCP car rather than paying the balloon, subject to mileage and condition.
Replace the example with your quotations
Enter the actual deposits, monthly payments, term, balloon and fees. The calculator will also compare returning the PCP car with keeping it.
Compare my PCP and HP quotes →Continue reading
For independent explanations, see MoneyHelper’s guides to PCP and HP.
Published and reviewed September 2026 · Illustrative educational example