Take a 30,000 euro car with a 3,000 euro deposit, 7.9% APR over 3 years, and a 12,000 euro PCP balloon. With a standard loan you finance 27,000 euro and pay about 844.84 euro a month, owning the car outright at the end, for a total cost of about 33,414 euro including the deposit. With PCP the 12,000 euro balloon is deferred to the end, so the monthly payments only need to amortise the financed amount less the present value of that balloon. That drops the monthly payment to about 548.35 euro, much easier on cash flow. But to actually keep the car you must pay the 12,000 euro balloon at the end, which brings the PCP total to about 34,741 euro, higher than the loan because interest accrues on the balloon across the full term.
How it is calculated
Both routes start by subtracting your deposit from the car price to get the financed amount. The standard loan amortises that whole amount over the term in equal monthly payments, and you own the car at the end, so its total cost is the deposit plus all the monthly payments. PCP works differently: a large final payment, the Guaranteed Minimum Future Value or balloon, is parked at the end of the term. The monthly payments only amortise the financed amount minus the present value of that balloon, which is why they are lower. The balloon still accrues interest across the term, so the tool discounts it back to today when sizing the monthly payment. The total PCP cost is the deposit, all the monthly payments, and the balloon paid at the end to keep the car. Because interest is charged on the deferred balloon for the whole term, PCP often costs more overall than a straight loan if you intend to keep the car.
Frequently asked questions
How does PCP differ from a car loan?
A standard car loan spreads the full balance (less deposit) over equal monthly payments, and you own the car at the end. PCP defers a large final balloon, the Guaranteed Minimum Future Value (GMFV), so monthly payments are lower, but you must pay or refinance the balloon to keep the car. Because the balloon accrues interest across the term, total interest on PCP can be higher.
Is car loan interest tax-deductible in Ireland?
No. Revenue does not allow personal car loan interest as a tax deduction for individuals. The interest is simply a personal borrowing cost. This differs from business use: if you are self-employed and the car is used for trade purposes, a portion of running costs (fuel, insurance, maintenance) may qualify, but the financing interest itself is generally not deductible under Revenue rules.
Does Vehicle Registration Tax affect my total cost?
VRT is charged by Revenue at registration and is typically included in the on-the-road price quoted by dealers. The rate from 2022 onwards is linked to CO2 and NOx emissions bands, with lower-emission vehicles attracting lower VRT. Electric vehicles qualified for a VRT relief of up to 5,000 euro under the 2025 SEAI scheme. If you are comparing a dealer quote to a private import, make sure both prices are on the same VRT-inclusive basis before entering the car price in this calculator.
What happens if I hand back the car at the end of PCP?
If the car is worth at least the GMFV and is in acceptable condition, you can simply hand it back and walk away with no balloon payment. The GMFV is the dealer guarantee of minimum residual value. If the car is worth more than the GMFV you can use that equity as a deposit on your next deal. If it is worth less, the dealer absorbs the shortfall because the GMFV is a guarantee. Excess mileage and damage charges may apply under the contract terms.