Compare two car finance deals — like 0% dealer PCP on a new car against a bank loan on a used-approved car — net of depreciation, mileage costs and tax, not just the headline APR.
Typically 25–60% of price. Real Cost below assumes you pay this off and keep the car at term end, so it can be compared fairly against the resale value estimate.
Auto-suggested above £40,000 list price — £440/year, tax years 2–6. Edit if the price is close to the threshold.
Auto-suggested above £40,000 list price — £440/year, tax years 2–6. Edit if the price is close to the threshold.
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Most car finance calculators stop at the monthly payment. This one goes further: it adds up everything you'll actually pay over the term — deposit, monthly payments, any balloon payment — then subtracts what the car is likely to be worth when the term ends. That final number, not the APR, is what the deal actually cost you.
A 0% dealer offer removes interest entirely — but the finance company still has to make money somewhere, and that's usually built into the price of the car rather than the rate. More importantly, 0% deals are disproportionately common on brand-new cars, which depreciate fastest in their first few years. You can pay no interest at all and still come out worse off than someone who paid 6–7% interest on a car that held its value far better. The calculator above makes that trade-off visible instead of hiding it behind a headline rate.
Consider a mid-size premium car — something like a Jaguar XE is a reasonable example — available new for around £32,000 on a dealer's 0% PCP offer, or as a 3-year-old approved-used equivalent for around £18,000 through an independent bank loan at a representative 6.9% APR. With a £3,000 deposit, a 45% balloon and a 4-year term, the new car's 0% deal has you paying back the full £32,000 you financed — but a new car in this class has typically lost over half its value in that time, so you're left having paid full price for a car now worth roughly £14,000. The used-approved car, by contrast, is past the steepest part of its depreciation curve: on the same 4-year term at 6.9%, the interest adds a real cost — but the car itself only loses a few thousand pounds more, because most of its depreciation already happened before you bought it. Run these exact numbers through the calculator above (they're the pre-filled defaults) and the used-approved loan comes out roughly half the real cost of the "free" new-car deal, despite paying interest the whole time.
Each scenario is independent — you can set either one to PCP or HP, new or used-approved, any price, deposit, APR and term. The point isn't that new cars must use PCP and used cars must use loans; it's comparing whichever two real offers you're actually choosing between. Real Cost is calculated the same way for both: total paid (deposit, monthly payments, and any balloon payment, assuming you pay it off and keep the car) plus any VED supplement or excess-mileage charge you've applied, minus the car's estimated resale value at the end of the term.
Every figure that reflects a real market condition — loan rates, depreciation, VED thresholds, typical mileage caps — is sourced and dated below, not invented.
The new-car curve is built from RAC's guidance that a vehicle typically loses 50–60% of its value in the first three years, and Autotrader's more granular figures — 20–30% in year one, around 15% of the remaining value in each of the next couple of years. There's no single published year-by-year dataset for either curve used here, so both are reasoned estimates that stay consistent with the ranges these sources actually state, not a precise forecast for any specific make or model. The used-approved curve is a further estimate: no source publishes a year-by-year breakdown for a car that's already three years old when bought, so this one assumes a flatter, later-stage decline consistent with RAC's statement that depreciation continues until around year eight before levelling out. Real depreciation varies significantly by make, model, condition and mileage — adjust your own expectations if you have a more specific valuation.
The default 6.9% used-approved loan APR sits within MoneySavingExpert's quoted range of representative rates (5.9–6.9% from the cheapest mainstream lenders, for well-qualifying borrowers) — edit it to match a real quote. The VED expensive-car supplement (£440/year, applied in tax years 2–6, on cars with a list price over £40,000) is taken directly from gov.uk's vehicle tax rate tables; electric cars have a higher £50,000 threshold, not modelled separately here. The default 8,000 mile/year PCP cap and 10p/mile excess charge are representative figures across major manufacturer schemes — check your own agreement, which will state its own figures exactly.
This is an illustrative estimate, not a personalised recommendation or a quote from any lender. Monthly payments are calculated exactly from the numbers you enter; resale values, depreciation and mileage costs are projections and will differ from what you're actually offered or actually experience. It doesn't model insurance, servicing or fuel/energy costs, which can differ meaningfully between a new and a used car and are too variable to estimate credibly here. No specific lender, dealer or finance product is recommended — always get a personalised quote before making a decision, and confirm any balloon, mileage or settlement figure directly with your finance provider.
VED rates and thresholds: gov.uk — Vehicle tax rate tables. Depreciation guidance: RAC — Vehicle depreciation and Autotrader — Car depreciation explained. Representative loan rates: MoneySavingExpert — Personal car loans. PCP balloon/settlement terminology follows the same Consumer Credit Act 1974 framework used on our PCP & HP car finance calculator. This is not financial advice — speak to a regulated adviser or your finance provider before making a borrowing decision.