What is a balloon payment on PCP?

The balloon payment — also called the Guaranteed Minimum Future Value (GMFV) — is the lump sum due at the end of a PCP deal if you want to keep the car. It is set by the lender based on the car’s predicted future value, and paying it transfers ownership to you.

What happens at the end of a PCP deal?

You have three choices: pay the balloon payment and keep the car, part-exchange it against a new deal, or hand it back to the lender (subject to mileage limits and fair wear-and-tear condition).

Is PCP cheaper than HP?

PCP usually has lower monthly payments than HP because you are not paying off the car’s full value — the balloon covers the rest. But HP is often cheaper overall if you plan to keep the car, since there is no large final payment.

PCP Calculator (UK)

Work out your PCP deal before you sign

Personal Contract Purchase (PCP) is the most popular way to finance a new car in the UK — the majority of new cars bought on finance use it. But the headline monthly figure only tells part of the story: your deposit, the APR, the term length and the final balloon payment (GMFV) all shape what you will actually pay over the life of the deal.

This free PCP calculator does the sums for you. Enter the car’s cash price, your deposit (plus any part-exchange value), the APR, the term and the balloon payment, and you will instantly see your estimated monthly payment, the total amount payable and the total interest — so you can compare quotes like-for-like and spot an expensive deal before you commit.

Typical UK PCP APRs sit between 6% and 12%, depending on your credit profile and whether the deal is manufacturer-supported. As a rough rule: a larger deposit or a smaller balloon lowers your monthly payment, while a longer term spreads the cost but usually pushes the total interest up.

What affects your monthly PCP payment?

Deposit — the more you put down, the less you borrow and the lower your monthlies.
Balloon (GMFV) — a higher guaranteed future value means lower monthly payments, but more to pay if you keep the car.
APR — even a 2% difference in APR can add hundreds of pounds in interest over a four-year term.
Annual mileage — higher mileage lowers the GMFV, which pushes monthly payments up.

Work out monthly payments for a PCP deal — including the final balloon payment (GMFV). Typical UK PCP APR: 6–12%.

How PCP works

You pay a deposit, then fixed monthly payments, then a final balloon payment (the Guaranteed Minimum Future Value, or GMFV) if you want to keep the car. The balloon is set by the lender based on the car's predicted value — higher annual mileage means a lower GMFV and higher monthlies.

Going over your agreed mileage means excess mileage charges (often 7–15p per mile), and damage beyond fair wear and tear costs extra if you hand the car back. PCP deals also give you voluntary termination rights once you've paid half the total amount payable.

Not sure PCP is right for you? Read our PCP vs HP vs Leasing explained guide, or compare with a standard loan in the EMI / Finance Calculator.

Estimate only — actual offers depend on credit status, mileage, the lender's GMFV and fees such as the option-to-purchase fee.