Car Payment Calculator UK
Free UK Car Payment Calculator. Calculate monthly payments for HP, PCP, personal loans and car leasing. Compare car finance options with current APR rates.
Last updated: February 2026
Car Payment Calculator UK
Calculate your monthly car payments for HP, PCP, or personal loans. Compare finance options to find the best deal for your budget.
UK Car Finance Options Explained
Understanding the different car finance types helps you choose the best option for your situation. Here are the main ways to finance a car in the UK:
HP (Hire Purchase)
- Own the car: Yes, at end of term
- Monthly payments: Higher than PCP
- Deposit: Typically 10%+
- Best for: High mileage, keeping car
PCP (Personal Contract Purchase)
- Own the car: Optional (pay balloon)
- Monthly payments: Lower than HP
- Balloon payment: £3,000-£15,000+
- Best for: Changing cars regularly
Personal Loan
- Own the car: Yes, immediately
- Monthly payments: Fixed
- Interest rates: Often lower APR
- Best for: Good credit, full ownership
PCH (Personal Contract Hire)
- Own the car: No, it's a lease
- Monthly payments: Usually lowest
- Mileage limits: Strict, excess charges
- Best for: Business use, fixed budgets
Current UK Car Finance Rates
Interest rates vary depending on the lender, car value, your credit score, and finance type. Here's a guide to typical rates in 2024:
| Finance Type | Typical APR Range | Best Deals |
|---|---|---|
| Manufacturer PCP (New) | 0% - 8.9% | 0% APR promotions on select models |
| Dealer HP (New) | 5.9% - 12.9% | ~6% with good credit |
| Dealer Finance (Used) | 8.9% - 14.9% | ~9% for approved used |
| Personal Loan | 3.0% - 12.9% | ~3-5% for excellent credit |
| Credit Card (0% Transfer) | 0% intro, then 19%+ | 0% for 12-24 months |
HP vs PCP: Detailed Comparison
The choice between HP and PCP depends on your driving habits, budget, and whether you want to own the car at the end.
| Feature | HP (Hire Purchase) | PCP |
|---|---|---|
| Monthly Payment | Higher (full cost spread) | Lower (balloon deferred) |
| Ownership | Automatic at end of term | Optional (pay balloon) |
| Mileage Limits | None | Yes (e.g., 10,000/year) |
| Flexibility | Less flexible | Return, buy, or part-exchange |
| Total Cost | Often lower overall | Can be higher if you buy |
| Best For | High mileage, keeping long-term | Low mileage, want new car regularly |
Example: £25,000 Car, 48 Months, 7.9% APR
| Metric | HP | PCP (£8,000 balloon) |
|---|---|---|
| Monthly Payment | ~£548 | ~£398 |
| Total Payments | ~£26,304 | ~£19,104 + £8,000 |
| Total Interest | ~£3,804 | ~£4,604 (if buying) |
| Ownership | Automatic | Pay £8,000 to own |
Tips for Getting the Best Car Finance Deal
1. Check Your Credit Score First
Before applying, check your credit report with all three agencies (Experian, Equifax, TransUnion). Correct any errors and consider improving your score if below 700.
2. Compare Multiple Lenders
Don't just accept the dealer's offer. Compare rates from banks, building societies, and online lenders. Personal loans often have lower APRs than dealer finance.
3. Negotiate the Car Price First
Agree the cash price before discussing finance. Some dealers inflate prices when they know you're financing to maintain their margin.
4. Consider the Total Cost
Lower monthly payments don't always mean better value. Calculate the total amount repayable including all fees and the balloon payment.
5. Read the Small Print
- Excess mileage charges (PCP/PCH)
- Condition charges for damage
- Early settlement fees
- Admin fees and documentation charges
Navigating UK Car Finance: What Dealers Won't Tell You
The UK car finance market is regulated by the Financial Conduct Authority (FCA), and understanding your rights and options can save you thousands of pounds over the life of a deal. Over 90% of new cars in the UK are now bought on finance, yet many buyers accept the first deal offered without comparing alternatives.
PCP vs HP: The Real Cost Difference
Personal Contract Purchase (PCP) accounts for around 80% of UK new car finance agreements, but it's not always the cheapest option. With PCP, monthly payments are lower because you're only financing the depreciation plus interest, not the full vehicle value. However, the total interest paid over the term is often higher than Hire Purchase (HP) because you're charged interest on the full amount, including the balloon payment you haven't yet paid. For a £30,000 car at 6.9% APR over 4 years, PCP monthly payments might be £350 with a £12,000 balloon, while HP payments would be around £720. But total interest on PCP comes to approximately £5,800 compared to £4,600 on HP. If you plan to keep the car, HP is almost always cheaper overall.
Your Right to Voluntary Termination
Under Section 99 of the Consumer Credit Act 1974, you have the legal right to hand back a car on HP or PCP once you've paid 50% of the total amount payable (not 50% of the car's value). This includes all interest and fees. For many PCP agreements, this halfway point is reached around 2-3 years into a 4-year deal. The car must be in reasonable condition, but normal wear and tear is accepted. This right exists regardless of what your finance agreement says, and the lender cannot refuse it. It's particularly useful if your circumstances change or the car's value has dropped below the settlement figure.
Checking the APR: Flat Rate vs True Rate
Some dealers quote a flat interest rate rather than the APR, which can be misleading. A flat rate of 3.5% roughly equates to an APR of around 6.5-7%, because the flat rate doesn't account for the reducing balance as you make repayments. Always compare offers using the APR, which is the legally required standard. The FCA mandates that all UK car finance advertisements must display a representative APR, and at least 51% of customers must receive this rate or better. If you have a credit score above 700, you should be able to secure rates well below the representative APR.
Frequently Asked Questions
APR (Annual Percentage Rate) is the true cost of borrowing including fees, calculated on the reducing balance. Flat rate applies interest to the original amount throughout. An 8% flat rate roughly equals a 15% APR. Always compare using APR as it's the legal standard for car finance in the UK.
Yes, but expect higher interest rates (15-30% APR or more). Specialist lenders like Moneybarn, CarFinance247, and Zuto consider applicants with poor credit. A larger deposit, a guarantor, or starting with a cheaper car can improve approval chances. Some dealers offer in-house finance for subprime borrowers.
You'll pay excess mileage charges when you return the car, typically 5p-15p per mile over the agreed limit. For example, 5,000 excess miles at 10p = £500. If you expect to exceed, consider buying the car at the balloon price, negotiating a higher mileage limit upfront, or switching to HP which has no mileage restrictions.
Not legally without settling the finance first. The finance company owns the car until paid off. To sell: get a settlement figure, pay it off (from the sale proceeds or your own funds), receive the V5C in your name, then sell. Alternatively, use the 'part-exchange' option with a dealer who can handle the settlement.
Under the Consumer Credit Act, you can voluntarily terminate (VT) an HP or PCP agreement once you've paid 50% of the total amount payable (including fees and interest). You return the car in good condition and owe nothing more. This is useful if you're in negative equity or your circumstances change. It's a legal right that can't be removed.
Buying outright avoids interest charges but ties up capital. Finance preserves cash for emergencies or investments that may earn more than the finance costs. If the finance APR is 7% but your savings earn 5%, the real cost is only 2%. Consider 0% APR deals which are effectively free borrowing. Personal circumstances and opportunity cost matter most.
Most lenders prefer 10% minimum, though some offer no-deposit deals (at higher APR). A 20% deposit typically secures better rates and lower monthly payments. For PCP, manufacturers often provide deposit contributions (£1,000-£5,000) as part of promotional offers. The higher your deposit, the less you borrow and the less interest you pay.
Common terms are 24-60 months. Shorter terms mean higher payments but less interest overall. Longer terms reduce monthly payments but increase total interest. Consider the car's warranty period (often 3 years) - being out of warranty while still paying can be costly. Also avoid owing more than the car's worth (negative equity) by not extending too long.
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Expert Reviewed — This calculator is reviewed by our team of financial experts and updated regularly with the latest UK tax rates and regulations. Last verified: February 2026.
Last updated: February 2026 | Verified with latest UK rates
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