Applying for PCP: A Guide to Using a PCP Car Finance Calculator
Want to know how much your next car will cost? Eliminate the guesswork with a car finance calculator.
While we don’t have a standalone PCP finance calculator, our general car finance calculator can still give you a reliable guide to monthly payments once you apply. Just enter how much you need to borrow, your preferred repayment term and a rough idea of your credit rating. Then let the calculator work its magic to give you an idea of the monthly repayments and total amount payable.
Once you’ve applied, you can work with our team to get estimated payments for personal contract purchase (PCP) deals – one of the most flexible and popular finance options in the UK, similar to what you might see when trying a PCP car finance calculator.
What Is PCP car finance?
PCP stands for personal contract purchase. As the name suggests, you sign a personal contract with an agreement to purchase a vehicle. In simple terms, you pay for a car in monthly instalments. Here’s how it works:
- The cost of the car (plus interest) is broken down into monthly repayments, plus an optional balloon payment at the end of the deal.
- You have three choices at the end of the term – pay the balloon payment to keep the car, return the vehicle, or upgrade with a new PCP deal.
- Because some of the cost is offset by the balloon payment, you get lower monthly repayments compared to other finance options like hire purchase (HP).
It’s the ideal option if you want to minimise ongoing costs and maximise flexibility.
PCP explained in 60 seconds
Wondering how PCP actually works? Here’s a quick explanation of the steps involved:
- Deposit – This is an upfront contribution to reduce the amount you need to borrow and show lenders you’re committed. It’s usually around 10%, but often flexible.
- Monthly payments – With PCP, your monthly payments cover the car’s depreciation over your repayment term, not its full value.
- GMFV – The guaranteed minimum future value (GMFV) will be stated in your agreement. It’s an estimated value of the car at the end of your term, which you can pay as a final balloon payment to own the car outright.
- Balloon payment – Pay it to keep the car, return it or part-exchange and upgrade with another PCP deal.
How a PCP car finance calculator typically works
If you’re weighing up PCP, you may have seen examples using a PCP car finance calculator to get quick estimates. These tools typically use the car’s price, term length, and an assumed interest rate to suggest possible monthly repayments and overall costs.
While we don’t provide a dedicated PCP car finance calculator, our general car loan calculator can still give you a useful guide. It factors in the vehicle price, term length and a typical interest rate based on your expected credit profile. Using that information, the calculator gives you an estimated price for monthly repayments and total amount payable.
Naturally, finance terms will vary from lender to lender, and depend on your individual profile.
However, our car finance calculator can give you a rough idea to help you budget your monthly payments before applying. It’s especially helpful if you’re comparing deals before visiting a dealership.
Worried about credit checks? You don’t have to just yet. The initial application is a soft search, so there’s no impact on your credit profile. Some lenders may perform a hard search on your credit file if you progress – but that’s only at a later stage.
Once you’ve applied for finance with My Car Credit, our team will work with you to get estimated payments for PCP deals, similar to what you might check with a PCP car finance calculator.
PCP vs HP: Which is right for you?
Before you use a car finance calculator for PCP, you might be wondering whether it’s the right option for you. The main alternative is hire purchase (HP) – we’ll explain the differences below:
- Ownership at the end – With HP, you’ll own the car outright once all payments are made. PCP has an optional balloon payment, so you can choose to buy, return or upgrade your vehicle.
- Monthly payments – Because of the balloon payment, monthly payments are lower with PCP compared to HP.
- Flexibility – PCP is seen as the more flexible option, as you can essentially “try before you buy”.
- Deposit requirements – HP usually requires a deposit of at least 10% of the car’s price, whereas PCP deposits can be as low as 0%.
Who is HP best for?
Hire purchase is the clear favourite if you want to own your car outright and you know that it’s the right car for you.
Who is PCP best for?
PCP is a good alternative for drivers who want lower monthly costs, are unsure whether they want to own their chosen car outright, and like the option of returning or upgrading their car.
PCP car loan calculation example
Let’s put it all into context with a realistic example. Imagine you find your ideal car that costs £15,000. You want a PCP deal for 48 months with a 10% deposit. The car’s GMFV is £5,000 – that’s how much it’s estimated to be worth at the end of your 48-month term.
Your deposit will cost £1,500 and you’ll need to borrow £8.500.
Based on a 9.9% APR rate, you’ll pay £10,268.08 in total – which breaks down as £213.71 each month for 48 months.
At the end of the term, you’ll have the option to buy the car with a £5,000 balloon payment.
Here’s how that deal could change based on some simple variables…
- Higher deposit – If you pay off more of the loan at the start, you’ll enjoy lower monthly costs.
- Higher mileage – Need to increase your annual mileage? Your GMFV will be lower, which reduces the balloon payment but increases the monthly costs.
- Better credit – If you have a better credit rating, you might benefit from a lower APR, which will reduce your monthly payments and overall costs.
What information do I need to apply for PCP car finance?
So, you’ve got an estimate from a PCP car finance calculator or even our car loan calculator. What do you need to take the next steps? Here’s what’s required to get started:
- Your name and address
- Employment status and income (monthly or annual is fine)
- Your budget or details of a specific car
- An estimated annual mileage and preferred term (such as 3, 4 or 5 years)
- Credit rating or score – even if it’s approximate
Don’t worry about getting everything bang on from the word ‘go’. My Car Credit’s car finance application process starts with a soft search, so there’s no impact on your credit score.
In simple terms, that means we can check whether your application is feasible before moving on to the next steps.
Can I use PCP finance on a used car?
PCP isn’t just for brand-new cars. Perhaps you’ve found the perfect used model that you’re ready to buy. Or maybe you just want to minimise depreciation with a nearly-new vehicle. Whatever the case, you can use our car finance calculator to break down the costs for a used vehicle on PCP – with a few conditions.
Most lenders will have age and mileage limits for used car finance. They might specify that cars are no older than five years, for example, or have under 70,000 miles on the clock.
Naturally, by going used, you will be narrowing your options in terms of the lenders you can work with. However, that shouldn’t be an issue with a broker like My Car Credit. Working with a broad panel of lenders, we aim to find something to suit every buyer’s circumstances.
What happens at the end of a PCP agreement?
The end of a PCP agreement is the main point of difference compared to hire purchase (HP) finance. And you might be unfamiliar with the process if you’ve not taken out a PCP deal before. Here are the three options:
- Return the car – After making your final monthly payment, you can return the car. You’ll make no further payments, assuming the car is within the mileage limits and condition requirements set out in your contract.
- Make the balloon payment – This covers the car’s GMFV, meaning you’ll own the car outright.
- Upgrade your car – The final option is to trade in or part-exchange the car. In this case, you’ll roll any equity in the car into a new deal.
PCP finance tips for UK car buyers
Using a generic car finance calculator or a more specific PCP car loan calculator is a smart first step in your car finance journey. Here’s how you can continue on the right footing throughout the process:
- Weigh up your balloon payment options – Only commit to the optional final payment if you plan to keep the car long-term. If you’re already considering a change, you might be better off returning it or part-exchanging as part of a new deal.
- Be smart with mileage – Rounding down your estimated mileage isn’t a clever trick that will save you money. In fact, it will cost you if and when you go over the agreed limit. Consider the mileage you’ve done in previous years and any potential changes in circumstances that could see more miles clocked up over your repayment term, such as changing jobs or having a baby. Then stick to the limit to avoid end-of-term fees.
- Choose cars that hold their value well – If your car holds its value well, it could be worth more than the GMFV at the end of the repayment term. That means you’ll benefit from higher equity when returning it or part-exchanging. Or you can pay the same balloon payment for a car that’s worth a little more.
- Consider GAP insurance – Guaranteed Asset Protection (GAP) is an optional insurance that covers your back if the car is written off or stolen. It means you won’t have to fork out for the difference between what the car is worth (to an insurer) and what you still owe (to your lender).
- Check for 0% APR PCP deals – PCP finance deals with 0% APR can minimise your monthly payments and the overall cost of your car. But be sure to read the fine print to check for big upfront deposits, limited vehicle choices, low annual mileage limits or inflated balloon payments.
Why choose My Car Credit for PCP car finance?
My Car Credit is part of Evolution Funding – giving us access to a wide panel of trusted lenders. That means we’re best-placed to find the right deal for drivers with all credit profiles, from excellent to poor.
As an FCA-regulated broker, we provide support you can trust with assistance from real people whenever it’s needed. Our simple online application process allows you to get a quote without delay and continue with your application when it suits you.
Start with our car finance calculator for an estimate of your payments, then our team can help tailor this into bespoke PCP or HP options – going beyond what a typical PCP car finance calculator alone can provide.
Get a personalised PCP quote today
When you’re ready to get the ball rolling on your application, My Car Credit is on hand to help. Once you’re happy with the terms from our car finance calculator, you can start your application with ease for a new or used car.
You’ll get a quote tailored to your circumstances with all credit backgrounds considered. There’s no obligation and no impact on your credit score initially, as we only use a soft credit check – though lenders may use a hard credit check at a later stage.
PCP finance FAQs
A PCP (personal contract purchase) car loan is a flexible finance option where you make monthly payments on a car, with a large optional “balloon payment” at the end if you want to own it. You can also return or upgrade the car instead of buying it.
PCP offers lower monthly payments with a final balloon payment if you choose to buy the car. HP (hire purchase) involves higher monthly payments but you automatically own the car after the final instalment. PCP gives more flexibility, while HP suits buyers who definitely want to own the car.
Your PCP monthly payment depends on the car’s price, your deposit size, term length, credit rating, expected annual mileage and the car’s guaranteed minimum future value (GMFV). A higher deposit or better credit score can lower payments, while higher mileage usually increases them due to lower future value.
Yes, PCP can be used for used cars, but lenders usually have age and mileage limits – often under five years old and fewer than 70,000 miles. While options may be more limited, brokers like My Car Credit work with multiple lenders to find deals that fit a range of used vehicles.
Yes, you can settle a PCP deal early by paying off the remaining balance, including any interest and possibly a portion of the balloon payment. However, early settlement terms vary by lender and may involve fees. Check your agreement to understand the exact process and any costs involved.
It’s possible to get PCP finance with bad credit, though options may be more limited and interest rates higher. Brokers like My Car Credit work with a wide panel of lenders, including those who consider applicants with lower credit scores. A soft credit check helps assess your eligibility without risk.
Secure your dream Aberdeen car finance today
Finding car finance needn’t be a hassle – and with My Car Credit, it won’t be. Use our car loan finance calculator for a breakdown of your expected monthly payments and more. Or to learn more about how we can help you, call us on 01246 458 810 or email us on enquiries@mycarcredit.co.uk today.