Tool
Car finance: PCP, HP, leasing or cash
The same car four ways: what each costs in total, the final payment, and what you own at the end.
The car
Paid up front on a PCP or hire purchase.
The same for every way of paying.
PCP
The guaranteed future value - what you pay at the end to keep the car.
Hire purchase
Leasing (personal contract hire)
The first payment, made up front.
Extra miles, damage or collection, if you expect any.
Cash
Leave at 0 to leave it out.
You own the car at the end
PCP, paying the final payment
£31,256
£3,000 down, £380.33 a month for 48 months, then £10,000 to keep it. £6,256 of it is interest.
Hire purchase
£29,519
£3,000 down, then £552.47 a month for 48 months. £4,519 of it is interest.
Cash
£25,000
£25,000 now.
You own nothing at the end
PCP, handing the car back
£21,256
£3,000 down, then £380.33 a month for 48 months. The car goes back.
Leasing
£16,500
£2,400 up front, then £300 a month for 47 months. The car goes back.
Fees the deals add, like an option to purchase fee, aren't counted unless you put them in the lease's fees at the end. A PCP or lease can charge for extra miles and damage when the car goes back.
How this is worked out
The APR is turned into a monthly rate as (1 + APR)^(1/12) - 1, so 9.9% APR is 0.790% a month. The monthly payment is the standard loan formula: it clears what's borrowed over the term, leaving the final payment still owed on a PCP. Interest is charged on that final payment for the whole deal too.
A lease's initial rental is its first payment, so the monthly ones run for one month less than the term. Cash counts what the price would have earned at the savings rate, added once a year; a deposit on finance would earn a little too, which isn't counted.
An illustration from the figures above, not a forecast. Facts, not financial advice.
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