PCP vs Owning a Car
Compare Personal Contract Purchase (PCP) finance against a personal loan to buy the same car.
PCP Finance
Monthly payment£635
Total monthly payments£22,862
Deposit£5,000
Final balloon payment£10,000
Total cost (if you keep the car)£37,862
You don't own the car until you pay the balloon. You can also hand it back.
Personal Loan
Monthly payment£635
Total monthly payments£22,862
Deposit£5,000
Final payment£0
Total cost£27,862
You own the car from day one. No mileage limits or condition charges.
Difference: £10,000 — PCP costs more overall, but has lower monthly payments.
PCP (Personal Contract Purchase) is a type of car finance where you pay a deposit, monthly instalments, then a large final 'balloon' payment to own the car — or hand it back. PCP agreements have mileage limits and condition requirements. A personal loan typically has higher monthly payments but lower total cost. Compare APRs carefully.
Assumptions
Based on 2026/27 UK tax rules for England. Tax bands: 20% to £50,270, 40% to £125,140, 45% above. Personal Allowance £12,570 (tapered above £100,000). National Insurance 8% on earnings between £12,570 and £50,270, 2% above. This is an educational estimate — not financial advice.