Car finance calculator: PCP vs HP

Because you're only financing the difference between the car's price and its balloon (expected future) value, not the full amount — the balloon itself is deferred to the end rather than spread across the monthly payments. It's not a lower rate or a smaller loan, just a different repayment shape.

If you intend to keep the car, compare HP's total cost against PCP's total-if-buying figure (which includes the balloon) — they're usually close, sometimes HP is slightly cheaper since PCP interest is calculated on a balance that includes the deferred balloon throughout the term. If you're likely to hand the car back or change cars every few years, PCP's lower monthly cost and no ownership commitment can work out better in practice.

It's the lender's guaranteed estimate of the car's value at the end of the agreement — set at the start of the deal, so you're protected if the car's actually worth less by then (the lender absorbs that risk, not you). You can find it quoted on any PCP deal; if you don't know it, use a rough estimate, or try a few figures to see how sensitive the monthly payment is to it.

PCP deals set an agreed annual mileage limit — go over it and you typically pay a per-mile excess charge if you hand the car back or trade it in, since higher mileage reduces the car's real value below the guaranteed balloon figure. This isn't modelled in the calculator; check your specific agreement's limit and excess-mileage rate.

Yes, if the car is worth more than the amount still owed (the settlement figure) — that difference becomes a deposit on your next car. This calculator doesn't project the settlement figure at a specific point mid-term, only the end-of-term outcome.

Use it as a like-for-like comparison starting point, not a final figure — real quotes include fees (arrangement, completion), may calculate interest slightly differently between lenders, and the APR you're offered depends on your credit profile. Always check the representative APR example the lender is legally required to show you.