Free UK Car Payment Calculator. Calculate monthly payments for HP, PCP, personal loans and car leasing. Compare car finance options with current APR rates.
Calculate your monthly car payments for HP, PCP, or personal loans. Compare finance options to find the best deal for your budget.
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:
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 |
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 |
| 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 |
Before applying, check your credit report with all three agencies (Experian, Equifax, TransUnion). Correct any errors and consider improving your score if below 700.
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.
Agree the cash price before discussing finance. Some dealers inflate prices when they know you're financing to maintain their margin.
Lower monthly payments don't always mean better value. Calculate the total amount repayable including all fees and the balloon payment.
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.
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: January 2026.
Last updated: January 2026 | Verified with latest UK rates
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