Car loan repayment calculator

What is a good interest rate for a car loan in the UK?

In 2025, typical car loan APRs range from 6% to 15%. A rate below 8% is generally competitive. Always compare APR rather than flat rates — flat rates significantly understate the real cost of borrowing.

What is the difference between PCP and HP car finance?

Hire Purchase (HP) means you own the car once all payments are made — no balloon payment and no mileage limits. PCP has lower monthly payments but a large optional final payment at the end. This calculator models HP or a personal loan.

Should I put down a bigger deposit?

Yes — a larger deposit reduces your loan amount, your monthly repayment, and the total interest paid. An extra £1,000 upfront on a typical 4-year loan can save hundreds in interest over the term.

Is dealer finance or a bank loan better?

Dealer finance is often more expensive, but dealers occasionally offer 0% promotional deals on new cars. Always compare the total amount repayable, not just the monthly figure. A lower monthly payment can hide a longer term and higher total cost.

What other costs should I factor in?

Car insurance, road tax, fuel, servicing, MOT, parking, and tyres all add up. Use the "Additional monthly costs" section above to add insurance, road tax, and parking to see your true monthly commitment.