Loan Calculator (with Balloon)
This calculator works out the repayments on typical HP or PCP agreements using a flat rate of interest per annum (so 10% on a £100 loan is £10 a year). The APR is shown too, which is the fairer way to compare agreements.
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Enter your figures and calculate.
Overview
This calculator works out the monthly repayments on a hire purchase (HP) or personal contract purchase (PCP) agreement priced with a flat rate of interest. A flat rate charges interest on the whole amount of credit for the whole term. So 10% flat on £100 of credit means £10 of interest every year, no matter how much you've already repaid. Enter the cash price, any deposit or part exchange, the term in months and the flat rate, and you'll get the instalments, the total charge for credit and the APR.
A flat rate ignores the fact that your balance falls as you repay, which makes borrowing look cheaper than it really is. That's why the calculator also works out the APR, the annualised rate that does account for the reducing balance and the timing of payments and fees. If you're weighing up two deals quoted at different flat rates, compare their APRs instead. Arrangement fees can be spread across the instalments or taken upfront, and there's a balloon field for PCP-style deals with a larger final payment.
How it works
Cash price, deposit and any part-exchange, the term in months, and the flat rate of interest. Add arrangement or option-to-purchase fees and a balloon if the deal has them.
The amount of credit is the cash price less your deposit and part-exchange. Interest is the credit multiplied by the flat rate and the number of years in the term. Fees go on top.
The total is spread over the term to give the monthly instalment, and the APR is worked out from the resulting schedule.
Worked example
£10,000 of credit over 48 months at 6% flat
Take a £12,000 cash price with a £2,000 deposit, leaving £10,000 of credit over 48 months at a 6% flat rate, with no fees. Interest is £10,000 × 6% × 4 years = £2,400. That gives a monthly instalment of about £258.33 and a total amount payable of roughly £14,400 including the deposit.
The APR works out at about 11.5%, nearly double the 6% flat rate, because interest keeps being charged on credit you've already paid back.