PCP Calculator
Estimate your PCP (Personal Contract Purchase) monthly payments. PCP keeps payments low by deferring part of the cost as a balloon payment (guaranteed future value) at the end of the agreement.
Reviewed by Richard Ross · Last updated April 2026
How PCP Calculator works
How PCP monthly payments are calculated
PCP finances only the depreciation — the difference between the vehicle price and the present value of the GFV. Monthly payment = (P − PV[GFV]) × r ÷ [1 − (1 + r)^(−n)], where P is amount financed (price minus deposit), PV[GFV] is the present value of the balloon, r is the monthly interest rate, and n is the term in months. This keeps payments lower than a standard loan but interest accrues on a larger outstanding balance.
The guaranteed future value (GFV) and what it means
The GFV is set by the dealer at the start of the agreement, based on the expected residual value after the contracted term and mileage. If the car is worth more than the GFV at the end, you have positive equity (which can be used as a deposit on the next car). If it is worth less, handing it back means the dealer absorbs the shortfall — but only if the car is in fair condition and within the agreed mileage. Exceeding the agreed mileage incurs a per-mile excess charge, typically 5–15p per mile.
Your three options at the end of a PCP agreement
Option 1 — Hand back: return the car and walk away (within mileage and condition). Option 2 — Buy: pay the GFV (balloon payment) to own the car outright. You can usually refinance the GFV if you do not have the cash. Option 3 — Part-exchange: if the car is worth more than the GFV, the dealer credits the difference as a deposit on your next PCP deal. Most drivers choose option 3, rolling from deal to deal every 2–4 years.
Worked example: £30,000 car, £3,000 deposit, £12,000 GFV, 6.9% APR, 48 months
Settlement figures and early exit
Under the Consumer Credit Act 1974 s.97, you have a statutory right to request a written settlement statement from your lender at any time. The lender must provide it within 12 working days. The settlement figure is the outstanding balance on the agreement, reduced by a statutory interest rebate. The rebate is calculated under the Consumer Credit (Early Settlement) Regulations 2004 using the actuarial method — meaning you get back a proportionate share of future interest for the months you are settling early. Most lenders also quote the settlement figure as part of your online account. Note that settling early does not waive any excess mileage or damage charges that apply at the end of the original term — these are assessed separately at the point of return.
Representative APR vs your actual APR
The advertised representative APR is a legal minimum: FCA rules require that at least 51% of customers accepted for the product must receive that rate or better. The remaining 49% can be offered a higher APR. In practice, your actual APR depends on the lender's credit assessment, the specific vehicle, the dealer's commission arrangement, and the term. A 6.9% representative APR could result in a personal APR of 12–18% for applicants with a thinner credit file. Always check the specific APR on your written quotation (the pre-contract credit information, or SECCI) before signing — that document is legally binding and must reflect the terms actually being offered to you.
PCP agreements and mortgage affordability
Mortgage lenders treat outstanding PCP balances as committed expenditure when assessing affordability. The monthly payment appears on your bank statements and in your credit file, reducing the income available for mortgage stress testing. More significantly, if the GFV balloon falls due within the mortgage application window, some lenders will factor it into the assessment as a future lump-sum liability. Even if you plan to hand the car back, the committed monthly cost still affects how much mortgage you can borrow. If you are planning to apply for a mortgage within 12 months, it is worth factoring this into any decision to take on or extend a PCP agreement.
FCA motor finance commission — the redress scheme
Discretionary commission arrangements (DCAs) — where dealers could set the interest rate on finance deals and earn more commission by charging higher rates — were banned by the FCA on 28 January 2021. A Supreme Court ruling in 2025 found that certain pre-ban arrangements may have been unlawful under the Consumer Credit Act 1974 s.140A. The FCA is operating a redress scheme for customers who held relevant motor finance agreements before 28 January 2021. Eligibility rules, timescales, and compensation calculations are subject to ongoing regulatory process. Check the FCA's website (fca.org.uk) for current guidance on whether you may be affected.
Source: FCA — Personal Contract Purchase explained (fca.org.uk/consumers/car-finance). Consumer Credit Act 1974 ss.97–100 — settlement and voluntary termination. Consumer Credit (Early Settlement) Regulations 2004. FCA — Motor finance discretionary commission arrangements (fca.org.uk/motor-finance-information).
Further reading
Weighing up PCP against PCH? The two products have significantly different ownership rights, early exit costs, and mileage risk profiles.
Read our PCP vs PCH guide for UK drivers →Frequently asked questions
What is PCP car finance?
PCP (Personal Contract Purchase) is the most popular form of car finance in the UK. You pay a deposit, make monthly payments over a fixed term, then choose to either pay the balloon payment (GFV) to keep the car, hand it back, or part-exchange it for a new deal.
What is the guaranteed future value (GFV)?
The GFV is the minimum value the dealer guarantees the car will be worth at the end of your agreement. It is set at the start and determines your monthly payments. If the car is worth more than the GFV, you have equity you can use as a deposit on your next car.
Is PCP cheaper than HP?
PCP has lower monthly payments because you are only financing the depreciation, not the full price. However, if you pay the balloon to keep the car, the total cost is usually higher than HP because interest accrues on a larger balance over the term.
What happens at the end of a PCP deal?
You have three options: hand the car back with nothing more to pay (assuming it is within agreed mileage and condition), pay the GFV to own the car outright, or part-exchange the car and use any equity as a deposit on a new agreement.
Can I end a PCP deal early?
Yes. You can voluntarily terminate under the Consumer Credit Act once you have paid 50% of the Total Amount Payable (deposit + all monthly payments + GFV). Alternatively, you can settle early by paying the outstanding balance minus an interest rebate.
What happens if I exceed the mileage on a PCP?
Excess mileage is charged at the rate agreed in your contract — typically 5–15p per mile. On a 30,000-mile over-mileage at 10p/mile, that is £3,000 due when you return the car. To avoid this charge, renegotiate your mileage allowance during the agreement (your monthly payment will increase slightly) or set it accurately from the start.
Can I part-exchange a car that is in negative equity?
Yes, but the outstanding negative equity is usually rolled into your next finance agreement, increasing the amount financed and your monthly payments. This is called "negative equity PCP" and can trap you in a cycle of increasing debt. Check your settlement figure vs the car's trade value before part-exchanging.
Is a PCP agreement regulated?
Yes. PCP agreements are regulated by the FCA under the Consumer Credit Act. This means you have rights including a 14-day cooling-off period, the right to voluntary termination after paying 50% of the Total Amount Payable, and protection against unfair dealer practices. Your lender must be FCA-authorised — check the FCA register.
What credit score do I need for PCP finance?
There is no fixed minimum, but most mainstream lenders offering competitive PCP rates require a good to excellent credit score. Poor credit may result in a higher APR or a requirement for a larger deposit. Some specialist lenders offer PCP for bad credit, but at significantly higher rates. Use a soft search pre-approval to check eligibility without affecting your score.
Should I use PCP, HP, or a personal loan?
PCP: lowest monthly payment, flexibility at end, best if you want a new car every 2-4 years. HP: no balloon, you own the car at the end, simpler. Personal loan: own the car immediately, can sometimes get a lower APR, no mileage restrictions. Compare total cost (including GFV if you plan to keep the car) rather than monthly payment alone.
How do I get a settlement figure for my PCP?
Under the Consumer Credit Act 1974 s.97, you can request a written settlement figure from your lender at any time — they must provide it within 12 working days. Most lenders also show it in your online account. The figure includes the remaining balance minus a statutory interest rebate for the months you are settling early (calculated under the Consumer Credit (Early Settlement) Regulations 2004). Settling early does not remove any excess mileage or damage charges that would apply on return.
Why is my actual PCP APR higher than the advertised rate?
The advertised representative APR only needs to be offered to 51% of accepted applicants — the rest can be offered a higher rate based on credit profile, vehicle, and term. Your actual APR is documented in the pre-contract credit information (SECCI) you receive before signing. If your rate is higher than the representative figure, check it on the SECCI before committing. A higher APR significantly increases the total interest over a 3–4 year term.
Does a PCP agreement affect my mortgage application?
Yes. Mortgage lenders count the PCP monthly payment as committed expenditure, reducing the income available for affordability stress tests. The balloon GFV may also be factored in if it falls due during the application window. Even if you plan to hand the car back, the monthly cost reduces your borrowing capacity. If you are applying for a mortgage in the next 12 months, consider whether taking on or extending a PCP agreement is advisable beforehand.
Am I affected by the FCA motor finance commission redress scheme?
If you held a PCP or HP agreement arranged through a dealer before 28 January 2021, you may be affected by the FCA's motor finance discretionary commission arrangement (DCA) redress scheme. DCAs — where dealers could set the interest rate to earn higher commission — were banned from that date. A Supreme Court ruling in 2025 found certain pre-ban arrangements may have been unlawful. The FCA is running a redress process for eligible historical cases. Check fca.org.uk/motor-finance-information for current eligibility guidance.
These calculations are estimates based on 2026/27 HMRC and DVLA rates. Speak to a lender or qualified financial adviser for a personalised quote.