Car Loan Calculator
Enter the car price, your deposit, interest rate, and loan term to see your monthly payment and total cost. The term comparison table shows how choosing a shorter or longer loan affects your monthly outgoings and total interest paid.
Finance details
Uses the standard annuity formula for fixed monthly repayments. Does not model PCP balloon payments.
Related: Loan Repayment · Lease vs Buy · Depreciation
How the car loan calculator works
This calculator uses the standard annuity formula to compute fixed monthly repayments on a hire purchase (HP) style car loan, where you borrow the car price minus your deposit and repay it in equal instalments over the chosen term. The term comparison table shows how changing the loan length affects both the monthly payment and the total amount repaid — shorter terms mean higher monthly payments but significantly less total interest.
In the UK, the two most common forms of car finance are hire purchase (HP) and personal contract purchase (PCP). With HP, you own the car outright once all payments are made. With PCP, you pay for the depreciation during the contract period and then choose to hand the car back, make a large optional final payment to own it, or use any positive equity as a deposit on a new PCP deal. This calculator models HP-style financing and does not include PCP balloon payments.
When arranging car finance, always compare the representative APR — not just the monthly payment. A low monthly payment over a long term can cost considerably more in interest than a higher payment over a shorter term. Under the Consumer Credit Act, you also have the right to voluntarily terminate a HP agreement after paying at least 50% of the total amount payable.
Frequently asked questions
Is a car loan or PCP better value?
A personal contract purchase (PCP) deal typically has lower monthly payments because you are only financing the depreciation of the car, not its full value. However, at the end of the term you do not automatically own the vehicle — you must make a large optional final payment (balloon payment) to keep it. A standard car loan means higher monthly payments but you own the car outright once it is repaid. PCP can appear cheaper month to month but often costs more overall, especially if you repeatedly change cars.
What is a good interest rate for a car loan?
Car loan APRs in the UK vary based on the lender, your credit score, the loan amount, and the term. Representative APRs from mainstream banks and credit unions typically range from around 6% to 15% for borrowers with good credit. Dealer finance is often higher. Borrowers with excellent credit and larger loan amounts may secure rates below 6%, while those with poor credit history may be offered significantly higher rates or declined. Always compare multiple lenders before committing.
Should I put down a larger deposit on a car?
A larger deposit reduces the amount you need to borrow, which lowers your monthly payment and the total interest paid over the term. It also reduces the risk of negative equity — where the car is worth less than the outstanding loan balance — which is a common issue with new cars that depreciate quickly. Where possible, putting down at least 10–20% of the car's value as a deposit is generally a sound financial approach.
Can I pay off a car loan early?
Yes, but check your loan agreement for early repayment charges (ERCs). Under the Consumer Credit Act, you are legally entitled to settle a car loan early and receive a rebate on future interest. However, some lenders charge an early repayment fee, typically up to 58 days' interest. If your loan has a low interest rate, it may not be worth paying early if the funds could earn more in a high-interest savings account instead.