Car Loan Calculator
Calculate car loan payments, total interest, and total cost. See monthly breakdown and amortization schedule for your vehicle purchase.
Monthly Payment
£372.86
Total Interest
£2,371.62
Total Cost
£22,371.62
Amount Financed
£20,000.00
Loan Breakdown
Payment Schedule (First 12 Months)
| Month | Payment | Principal | Interest | Balance |
|---|---|---|---|---|
| 1 | £372.86 | £297.86 | £75.00 | £19,702.14 |
| 2 | £372.86 | £298.98 | £73.88 | £19,403.16 |
| 3 | £372.86 | £300.10 | £72.76 | £19,103.06 |
| 4 | £372.86 | £301.22 | £71.64 | £18,801.84 |
| 5 | £372.86 | £302.35 | £70.51 | £18,499.49 |
| 6 | £372.86 | £303.49 | £69.37 | £18,196.00 |
| 7 | £372.86 | £304.62 | £68.24 | £17,891.38 |
| 8 | £372.86 | £305.77 | £67.09 | £17,585.61 |
| 9 | £372.86 | £306.91 | £65.95 | £17,278.70 |
| 10 | £372.86 | £308.06 | £64.80 | £16,970.63 |
| 11 | £372.86 | £309.22 | £63.64 | £16,661.41 |
| 12 | £372.86 | £310.38 | £62.48 | £16,351.03 |
Loan Tips
- ✓ A larger deposit reduces monthly payments and total interest
- ✓ Compare rates from multiple lenders
- ✓ Shorter terms mean less interest but higher monthly payments
- ✓ Factor in insurance, tax, and maintenance costs
Quick Vehicle Prices
How Car Finance Actually Works
Most UK car finance is a fixed-rate, fixed-term agreement: you borrow the price minus your deposit, pay interest on the balance, and clear it over 36 to 84 months. On a £25,000 car with a £5,000 deposit and 4.5% APR over 60 months, you borrow £20,000, pay roughly £373 a month, and end up paying about £2,388 in interest on top of the principal. The calculator works out monthly payment, total interest, and total cost for any combination of those numbers.
The single biggest factor is the interest rate. The same £20,000 loan at 8.5% costs £410 a month and £4,580 in interest, almost double. Always check the APR rather than the headline rate; APR includes fees, so it is the only fair like-for-like figure between dealers and manufacturer finance offers.
PCP vs HP vs Personal Loan
PCP (Personal Contract Purchase) splits the cost into deposit, monthly payments, and a final balloon payment to own the car outright. Monthly payments are lower because you are only paying off the depreciation, not the whole car. HP (Hire Purchase) is a traditional loan: you pay the whole car off in equal monthly instalments and own it at the end. A personal loan from a bank is similar to HP but the car is yours from day one and the bank is not interested in what the money was for.
PCP is the cheapest monthly payment but you do not own the car at the end unless you pay the balloon (typically £8,000 to £15,000 on a £25,000 car). HP and personal loan are higher monthly but you own the car when the term ends. The calculator on this page is set up for HP/personal loan style fixed payments. For PCP comparisons, compare the monthly payment plus the final balloon as a separate decision.
How Big a Deposit Should You Put Down?
More deposit means lower monthly payment and less total interest, but tying up cash that could earn 4 to 5% in a savings account is also a cost. The sweet spot is usually 10 to 20% of the car price, enough that the loan starts in equity (you owe less than the car is worth) and stays there even after first-year depreciation. A new car loses 15 to 25% of its value in year one, so a 10% deposit on a brand new car still leaves you slightly upside down at month 12.
If the car is two or three years old, a smaller deposit is fine because depreciation has already slowed. The calculator's deposit percentage shortcut buttons (10%, 20%, 30%) make it easy to see how monthly payment shifts. As a rule of thumb, every 10% increase in deposit drops the monthly payment by roughly 10% on the same term.
£20,000 Loan Monthly Payments by Term and Rate
| Term | 4.0% APR | 5.5% APR | 7.0% APR | 9.0% APR |
|---|---|---|---|---|
| 36 months | £590 | £604 | £617 | £636 |
| 48 months | £451 | £465 | £479 | £497 |
| 60 months | £368 | £382 | £396 | £415 |
| 72 months | £313 | £327 | £341 | £361 |
| 84 months | £273 | £287 | £302 | £322 |
Frequently Asked Questions
What APR should I expect on car finance in 2026?
Manufacturer 0% deals appear from time to time on slow-selling models, but typical mainstream rates in April 2026 are 6 to 9% APR through dealers, 5 to 7% through banks for personal loans, and 4 to 6% from credit unions if you are a member. Always check personal loan rates against PCP/HP; banks are often cheaper than dealers for buyers with strong credit history.
Should I take a longer term to lower my monthly payment?
Only if the alternative is genuinely unaffordable. Stretching from 60 months to 84 months drops a £20,000 loan from £382 to £287 per month at 5.5% APR, but you pay £1,160 more in total interest. You also keep paying for a car that may be at the end of its useful life by the time you finish. 48 to 60 months is the realistic sweet spot for new cars; 36 months is sometimes possible for used.
Can I pay off the loan early?
Yes, on almost all UK car finance. By law, lenders must accept a full or partial early settlement, though some apply a 1 to 2% early settlement charge to recover some of the lost interest. Always check the early settlement quote rather than just multiplying the remaining payments; the figure is usually lower because you are no longer paying future interest.
What is GAP insurance and do I need it?
GAP (Guaranteed Asset Protection) covers the gap between your insurer's payout if the car is written off and the amount still outstanding on the finance. Useful in the first 18 to 24 months of a new car loan when depreciation outruns the loan balance. After that, the finance balance usually drops below market value and GAP becomes unnecessary. Bank-arranged GAP is typically half the price of dealer-arranged GAP.
Does the calculator include road tax and insurance?
No, only the loan element (principal, monthly payment, total interest, total cost). Road tax (VED), insurance, fuel and maintenance are separate. For total running costs, add those to the loan figure or use the [cost per mile calculator](/cost-per-mile-calculator) to see the all-in number.
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