Car Loan Repayment Calculator 2026-27
Buying a car? Know your monthly payment before you walk into the dealer.
Calculate monthly repayments on a car loan in the United Kingdom. Enter your loan amount, interest rate, and term in years. Shows monthly repayment, total interest paid, and total cost of the loan.
Comparison rate includes fees. Check your lender's full schedule.
Amortisation formula for fixed-rate loans
The amortisation formula
Monthly repayment = Loan × [r(1+r)^n] ÷ [(1+r)^n − 1], where r = monthly interest rate (annual ÷ 12) and n = total months. On a £25,000 car loan at 7% APR for 5 years: n = 60, r = 0.00583. Monthly repayment ≈ £495. In early months, most of each payment is interest; later, more goes to principal. Under The FCA's CONC rules, UK lenders must display the representative APR and total amount payable — not just the monthly cost.
Monthly repayments at common loan sizes and rates
| Loan amount | 5yr @ 7% | 5yr @ 10% | 5yr @ 15% |
|---|---|---|---|
| £10,000 | £198 | £212 | £238 |
| £15,000 | £297 | £319 | £357 |
| £20,000 | £396 | £425 | £475 |
| £25,000 | £495 | £531 | £594 |
UK car finance compared: HP, PCP, PCH, personal loan
UK drivers finance roughly nine out of ten new cars according to the Finance & Leasing Association (FLA). Four products dominate, each regulated by the Financial Conduct Authority under the Consumer Credit Act 1974 and the CONC sourcebook. Choosing the right one depends on whether you want to own the car, how long you plan to keep it, and how much flexibility you need.
The four UK options at a glance
| Product | Deposit | Ownership | Monthly cost | End of term | Typical APR |
|---|---|---|---|---|---|
| Hire Purchase (HP) | 10–20% | Yours after final payment | Highest of three | Pay £1 option fee; car is yours | 6.9–11.9% |
| Personal Contract Purchase (PCP) | 10–20% | Yours if you pay GMFV balloon | Lowest (balloon deferred) | Return, swap or pay balloon | 5.9–10.9% |
| Personal Contract Hire (PCH lease) | 3–9 monthly rentals | Never yours | Low, includes road tax | Return only; excess mileage fees | Quoted as rental, not APR |
| Unsecured personal loan | Not required | Yours from day one | Mid-range | Loan ends, car already yours | 6.9–14.9% |
How to choose
HP suits buyers who want certainty of ownership at term end and plan to keep the car 6+ years. PCP suits drivers who like changing car every 3–4 years; the GMFV (Guaranteed Minimum Future Value) protects against depreciation risk but mileage caps (typically 6,000–15,000/year) apply. PCH works best for company drivers or those who never want to own — Black Horse, Lex, and ALD Automotive dominate. A personal loan from a bank or credit union (e.g. London Mutual, Plane Saver) often beats dealer finance for used cars and offers full flexibility to overpay without ERC.
Regulatory protections
All four are FCA-regulated. Under CCA s.75, if you pay any part (even £100) of a car costing between £100 and £30,000 on a credit card, the card issuer is jointly liable with the dealer for misrepresentation or breach. HP and PCP agreements also give a statutory 14-day right of withdrawal and voluntary termination rights once 50% of the total amount payable has been paid.
How overpayments cut UK car loan interest
Overpaying a car loan reduces the interest charged because most UK agreements accrue interest daily on the outstanding balance. Under the Consumer Credit (Early Settlement) Regulations 2004, a settlement figure is calculated with a limited interest rebate — but regular partial overpayments still deliver meaningful savings on long-term finance.
Worked example — £20,000 personal loan, 5 years, 7% APR
| Scenario | Monthly payment | Term | Total interest | Saving |
|---|---|---|---|---|
| Standard repayment | £396 | 60 months | £3,761 | — |
| +£50/month overpayment | £446 | ~52 months | £3,253 | £508 |
| +£100/month overpayment | £496 | ~46 months | £2,844 | £917 |
| +£200/month overpayment | £596 | ~38 months | £2,232 | £1,529 |
When overpaying makes sense
Overpay when your loan APR exceeds the after-tax return on your savings. With Personal Savings Allowance of £1,000 (basic rate) or £500 (higher rate) against easy-access accounts paying ~4%, any car loan above ~5% APR is mathematically worth clearing. The exception is a 0% manufacturer finance deal — keep the cash in a fixed-rate savings bond and pay the minimum until the deal ends.
HP and PCP limits
On HP and PCP agreements, the lender can apply a small rebate calculation under CCA s.95 rather than cancelling future interest pound-for-pound. Some agreements cap annual overpayments at £5,000–£10,000 without charge. Check the pre-contract credit information (SECCI) before overpaying more than £500 at a time. Unsecured personal loans from providers such as M&S Bank, Zopa, and Admiral typically allow unlimited, fee-free overpayments.
What UK car loan APR should you expect?
The APR you are offered depends mostly on your credit file (Experian, Equifax, or TransUnion), the loan-to-value of the deal, and whether the finance is secured on the car. The Bank of England publishes average unsecured personal loan rates in its Money and Credit statistics; the averages below blend those with FCA market data and FLA lender quotes for 2026.
APR by credit tier (unsecured personal loan, £15,000, 5-year term)
| Credit tier | Experian score | Typical APR | Monthly payment |
|---|---|---|---|
| Excellent | 961–999 | 6.4–7.9% | £292–£303 |
| Good | 881–960 | 7.9–10.9% | £303–£326 |
| Fair | 721–880 | 10.9–19.9% | £326–£397 |
| Poor | 561–720 | 19.9–34.9% | £397–£506 |
| Very poor | 0–560 | Decline or 49.9%+ specialist | £555+ via guarantor |
Secured vs unsecured, bank vs dealer vs credit union
| Channel | Secured (HP) | Unsecured personal loan |
|---|---|---|
| High-street bank (Barclays, HSBC, Lloyds) | n/a | 6.9–9.9% |
| Digital lender (Zopa, Tesco Bank, M&S) | n/a | 6.4–14.9% |
| Dealer finance (Black Horse, Santander Consumer) | 6.9–10.9% | n/a |
| Manufacturer captive (VW Financial Services, BMW FS) | 0% promo – 7.9% | n/a |
| Credit union (London Mutual, Plane Saver) | 5.9–9.9% | 5.9–12.9% |
Things that move your APR
Length of residence, electoral roll registration, and active UK current account history all lift scores quickly. Running multiple hard searches within 14 days (for mortgages or car finance) is typically counted as one inquiry by UK credit reference agencies — but soft-search eligibility checks at Experian Marketplace or ClearScore are preferable before applying. FCA rules require lenders to offer the representative APR to at least 51% of accepted customers, so a "representative 7.9%" advert does not guarantee that rate.
Frequently askedFrequently asked questions
What is the difference between APR and a flat interest rate for car loans?
The flat (nominal) rate is the headline number advertised. The Representative APR includes most fees and is the figure The FCA requires under CONC 3 — at least 51% of customers must actually receive it. On a £25,000 UK car loan, the difference between an 8% flat and a 14.9% representative APR can be £1,500+ over 5 years. Always compare APR, not monthly payment alone.
HP vs PCP vs personal loan — which is best in the UK?
A personal loan (unsecured, from a bank or Zopa/Tesco Bank) lets you own the car outright; typical rates 6.9–12.9% APR for good credit. Hire Purchase (HP) is secured on the car — lower rates (6–10%), but the dealer owns it until the final payment and Section 90 of the Consumer Credit Act 1974 lets them repossess without a court order if less than one-third is paid. PCP (Personal Contract Purchase) has a deferred "optional final payment" (the Guaranteed Minimum Future Value), keeping monthlies low but with mileage caps and excess-wear charges.
Where these figures come from
Every threshold and tax rate on this page is taken from HM Revenue & Customs (HMRC) via GOV.UK — the source of record for UK income tax, National Insurance, VAT, and capital gains tax.
- Income Tax rates & Personal Allowance — GOV.UK — Income Tax rates and Personal Allowances.
- National Insurance rates & thresholds — GOV.UK — National Insurance rates and categories.
- Personal Allowance taper (£100k+) — GOV.UK — Income over £100,000.
- Capital Gains Tax rates & allowance — GOV.UK — Capital Gains Tax rates.
- Dividend Tax — GOV.UK — Tax on dividends.
- ISA annual allowance — GOV.UK — Individual Savings Accounts.
Last checked: April 2026. Rates and thresholds are reviewed against the source of record each November, when annual adjustments for the following tax year are published.
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Your result reflects the financial position of the property scenario you entered — based on current rates, market rules, and standard calculation methods used across the Australian property industry.
Use this as a planning figure. Compare different property prices, deposit sizes, or loan terms to see how each changes the outcome. Adjust inputs in Standard or Advanced mode for more detail.
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Property calculations are most sensitive to the interest rate, loan amount, and time horizon. Small changes to these inputs produce the largest shifts in your result.
A 0.5% rate change on a £500k loan shifts annual interest by ~£2,500. Use Standard mode to compare fixed vs variable rate scenarios.
Extending the loan term reduces repayments but increases total interest. Interest-only periods change cash flow but not total cost. Model both in Advanced mode.
The ratio of your loan to the property value affects LMI, rate pricing, and lender appetite. Crossing the 80% LVR threshold changes the cost structure significantly.
To improve your property outcome, focus on the inputs with the highest leverage — these typically produce more impact per dollar than broad changes.
A larger deposit reduces LVR, eliminates LMI at 80%, and may unlock better rate pricing. Even £10k–£20k extra deposit can shift the cost picture.
Credit card limits and personal loans reduce borrowing capacity pound-for-pound. Closing unused cards before applying is one of the fastest levers.
Rate, policy, and LVR treatment vary between lenders. A mortgage broker can identify the best fit for your specific profile and property type.
Property decisions involve multiple linked calculations. Use the related calculators to model the full picture before committing.
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