Compare new-car finance quotes by fixing the car, price, deposit and contract length first. Then put every quote into the same worksheet: cash price, amount financed, APR, payment pattern, fees, total amount payable and, for PCP, the optional final payment. A low monthly payment is not evidence of a cheap car. It can mean a longer term or a larger amount left to the end.
This is a practical comparison method, not a list of current offers. For background, see our new-car finance guide. The official MoneyHelper PCP guide says to check the deposit, balloon, monthly payments, interest, APR, term, mileage, wear and tear and all fees. Those are the fields that make a sales illustration comparable.
Freeze the comparison before looking at the payment
Ask every dealer or lender for a written quote for the same make, model, trim, factory options, delivery timing and registration status. Write down the agreed cash price before finance. If one quote has a service plan, paint protection or warranty, either remove it from all quotes or show it as a separate line. An add-on hidden in the amount financed changes both the monthly payment and the interest.
Keep the term, annual mileage and finance type alike. A 36-month PCP at 8,000 miles a year cannot be judged fairly against a 48-month PCP at 12,000 miles. Record whether the product is PCP, HP or a lease. PCP normally leaves an optional final payment and conditions for returning the car. HP normally ends in ownership after the scheduled payments and any option-to-purchase fee. A lease is a hire arrangement, not a credit purchase, so do not compare its headline payment with an ownership total without stating what happens at the end.
The worksheet that prevents false comparisons
| Field | Quote A | Quote B |
|---|---|---|
| Cash price and included equipment | ||
| Your cash deposit | ||
| Part-exchange value and old settlement | ||
| Manufacturer or dealer contribution | ||
| Amount of credit | ||
| APR, interest charge and rate type | ||
| Initial payment, regular payments and term | ||
| Arrangement, option or completion fees | ||
| Total amount payable | ||
| PCP final payment, mileage and return standard |
Do not add the cash price to the total amount payable. The total amount payable in a regulated credit disclosure normally already includes the amount borrowed and the finance charges. For a useful ownership comparison, show two totals: the scheduled finance total including your own deposit, and the cost of any separate running or optional products. Ask the provider to explain any difference between the quote and your arithmetic.
Cash price, deposit and contributions
Start with the transaction price, not the advertised “saving”. A manufacturer contribution is promotional support under conditions, not money you can withdraw. It might require a named finance company, a particular PCP or HP product, a model, a registration deadline or a minimum customer deposit. A part-exchange is also not automatically a deposit: subtract the old finance settlement from the vehicle’s realistic value. If the car is worth £9,500 and the settlement is £8,200, only £1,300 is equity before any fees.
Ask for a quote with and without each add-on. Check whether a contribution is applied before or after the deposit, whether it is included in the cash price, and whether paying cash removes it. HMRC’s guidance on manufacturer and dealer contributions illustrates why the documents matter: the treatment depends on who pays and how the transaction is structured. Do not infer the treatment from a salesperson’s shorthand.
Worked comparison: payment is not the result
Hypothetical illustration only: both quotes finance £25,000 after a £3,000 customer deposit on a £28,000 car. Quote A runs for 36 months at an effective annual rate of 4.9%; Quote B runs for 48 months at 8.9%. There are no fees and no balloon in this deliberately simple amortising example.
| Measure | Quote A | Quote B |
|---|---|---|
| Regular payment | About £746.95 | About £616.87 |
| Scheduled payments | About £26,890.36 | About £29,609.90 |
| Finance charge before fees | About £1,890.36 | About £4,609.90 |
| Customer deposit | £3,000 | £3,000 |
| Illustrative total including deposit | About £29,890.36 | About £32,609.90 |
The calculation uses the standard payment formula, with the effective annual rate converted to an equivalent monthly rate: payment = principal × monthly rate ÷ (1 − (1 + monthly rate)−number of payments). Quote B is about £130.08 cheaper each month, yet about £2,719.54 dearer across scheduled payments. The lender’s disclosure is the controlling figure because real agreements can include fees, uneven initial payments and different rate conventions. The lesson is not that 36 months is always best. It is that you must price the extra 12 months.
How to compare PCP properly
PCP payments cover only part of the car’s value because the contract sets an optional final payment, often called the GMFV or balloon. MoneyHelper explains that interest is based on the balance after the deposit, but on the whole value minus the deposit rather than simply on the monthly depreciation. Put the balloon beside, not below, the monthly payment. Ask three separate questions: what will I have paid if I return it, what will I have paid if I buy it, and what will a replacement cost?
If you plan to buy, include the balloon and any option-to-purchase fee in the ownership total. If you plan to return, check the agreed mileage, excess-mile charge and fair-wear standard. A car can be returned without buying it, but damage beyond the contract standard or excess mileage can be charged. If you part-exchange, the dealer’s valuation minus the settlement figure creates equity or a shortfall. Do not treat a quoted trade-in number as guaranteed until the vehicle is inspected.
APR, representative rates and fees
APR is useful for comparing credit with broadly similar structures because it incorporates the cost of borrowing and certain compulsory charges. It does not answer whether one car is right for you, and a representative APR is not necessarily the rate you will receive. Ask whether the quote is a firm personalised illustration or only an example. Look for a fixed or variable rate, the amount of credit, total charge for credit, initial payment and final payment.
Check for a documentation fee, option-to-purchase fee, completion fee, delivery charge, interest on an add-on and any conditional rebate. Ask whether a service plan is cancellable or financed. Never compare a quote with a large customer deposit against one with no deposit and call the difference an interest saving. The cash has an opportunity cost and could be needed for insurance, tyres or a repair.
Affordability is more than the instalment
Build a monthly budget using the payment plus insurance, fuel or charging, parking, servicing, tyres, tax where applicable and a reserve for irregular repairs. Stress-test it against an income drop, a rent or mortgage rise and an unexpected bill. If the payment only fits when overtime continues, it does not fit safely. A lender’s approval is not a personal affordability recommendation.
Consider the exit route before signing. If you may move house, change job or drive many more miles, a rigid mileage allowance or long term could be a poor match. If you are in difficulty, contact the finance provider early and seek free debt advice. Do not simply stop paying. Returning a car under a contract, voluntary termination under the Consumer Credit Act and cancelling a credit agreement in a cooling-off period are different actions with different consequences.
Questions to send before signing
- What is the cash price if every optional product is removed?
- What exact amount is my deposit, and what amount is a contribution?
- What is the amount of credit and the total amount payable?
- Are there any initial, final, option or documentation fees?
- Is the APR personalised, and is the rate fixed?
- For PCP, what are the balloon, mileage allowance, excess-mile rate and return standard?
- What happens if I want to settle early, return the car or change the mileage?
- Which company is the lender and where do I send a complaint?
A five-minute decision order
- Reject any quote whose cash price, fees or final payment is unclear.
- Remove unwanted extras and ask for a new written illustration.
- Compare like-for-like total amount payable, then inspect APR and term.
- Test the full ownership budget, including irregular costs.
- Choose the contract whose end result suits your likely use, not the one with the smallest headline payment.
Use our dealer contribution guide for promotional terminology, our PCP, HP and leasing comparison for contract differences, and the UK new-car offers directory only as a starting point. Verify the final documents with the participating dealer. This is general information, not personal financial advice.
Compare the contract, not just the car
Two quotes can describe the same vehicle but different risks. Check who owns the car during the term, whether you may take it abroad, whether maintenance is included, and what happens after a missed payment. A PCP return is governed by its contract and condition rules. A lease may charge for early termination under its hire terms. HP has a different ownership path. Put the product name at the top of your worksheet so a convenient monthly figure cannot blur those differences.
Look at timing as well as totals. A contribution available only for a particular registration date may not survive a delayed delivery. An “initial payment” can be three regular payments, a first payment plus fees, or a separate advance payment. Record the date and amount of each payment. If a quote says “from”, ask what customer profile, deposit, mileage and optional equipment create that figure.
When the cheapest total is not the right answer
Total payable is the best starting measure for price, but it is not the only decision. A shorter agreement may cost less interest while demanding a payment that leaves no room for an irregular bill. A PCP may have a lower scheduled total because it leaves a balloon, not because the car is cheaper. A lease may have predictable payments but no ownership value. Decide what outcome you are buying: reliable transport for a period, eventual ownership, or flexibility to change cars.
For a household comparison, write a “keep”, “return” and “change” note beside each quote. Under keep, include the PCP balloon or HP completion fee. Under return, include mileage and condition exposure. Under change, include any shortfall or equity and the replacement’s deposit. This forces the end of the contract into today’s decision.
Final document checklist
- Match the vehicle identification number or exact specification once allocated.
- Check the customer deposit, contribution and part-exchange are each shown correctly.
- Check the amount of credit against the cash price less every stated payment.
- Check payment dates, number of payments, final payment and all fees.
- Save the pre-contract information, signed agreement, order form and advert.
- Use the lender’s complaints route if a promised figure is missing or changed.
Take time to read before signing. A dealer can explain a line, but the signed credit agreement and pre-contract information are the documents to resolve a disagreement. If you cannot explain what you pay at the start, each month and at the end, the quote is not ready for comparison.
A simple red-flag test
Pause if the dealer will not provide the amount of credit, the total amount payable or the final PCP payment in writing. Pause if a contribution is described as cash but disappears when you ask for a cash price. Pause if the only answer to “what happens if I return it?” is a monthly payment. A clear quote should survive a calm comparison away from the showroom.
Frequently asked questions
What should I do if one quote has a contribution and another does not?
Ask for both cash prices and finance illustrations with the same car and equipment. Record the contribution as conditional support, not as your own deposit, and compare the amount of credit and total amount payable after it is applied.
Is a lower APR always the better quote?
No. Compare the same cash price, term, deposit, fees and final payment first. A lower APR on a more expensive car or a quote with a larger balloon can still produce a different total and end result.
How do I compare quotes with different deposits?
Calculate the cash left after each deposit, then compare monthly payment, total amount payable and end-of-contract obligation. Do not call cash moved from savings a saving unless the finance charge reduction justifies the liquidity you give up.
What does total amount payable include?
It generally combines the amount borrowed and the finance charges shown in the regulated credit disclosure, including stated compulsory fees. Check the agreement rather than adding the cash price to it a second time.
Should I use the representative APR in an advert?
Use it as a starting point only. Ask whether your personal illustration offers that rate, and compare the amount of credit, payment pattern, fees and total payable on the document you would actually sign.
How can I compare a quote with a part-exchange?
Write the vehicle valuation and old finance settlement separately. Subtract the settlement from the valuation to find equity or a shortfall, then compare the replacement car’s cash price and finance without hiding the old balance in the new payment.
What if the first payment is different?
List it separately from the regular payment. Some illustrations use several payments upfront or add a fee to the first instalment, so multiplying the headline monthly figure can understate the scheduled total.
Can I compare a lease payment with PCP?
Only after stating the different outcomes. A lease is hire and normally does not lead to ownership, while PCP leaves an optional balloon and return conditions. Compare total use cost, upfront payment, mileage and end charges rather than payment alone.
What should I check when mileage is uncertain?
Use a realistic annual estimate including commuting, holidays and family trips. Ask the provider for the excess-mile rate and whether changing the allowance later is possible. An artificially low allowance can make a quote look cheaper.
When should I walk away from a finance quote?
Walk away or pause if the cash price, amount of credit, fees, final payment or contribution conditions are unclear, or if the payment only works by exhausting your emergency buffer. Request a corrected written illustration before signing.
What is the most important number when comparing new car finance quotes?
Start with the total amount payable for the same car and contract, then check APR, deposit, term, fees and any final PCP payment. A low monthly payment can simply mean a longer term or a larger balloon.
Should I compare monthly payments or total cost?
Compare both, but use total cost to judge value. Monthly payments help test your budget; total payable shows what the finance and car will cost over the agreement.
Can I compare a PCP quote with an HP quote?
Yes, but record the different end results. For PCP, show the optional final payment and return conditions. For HP, include the final option-to-purchase fee and the amount needed for ownership.