UK Car Loan Calculator
Over 90% of new cars in the UK are bought on finance — but monthly payment alone doesn’t tell you the full story. Enter your vehicle price, deposit, APR and term to see your total repayable across PCP, HP or personal loan, compare two finance deals side by side, and calculate your HMRC approved mileage allowance if you use the car for business.
Enter Your Vehicle Price & Deposit
Select PCP, HP, or personal loan, then enter your vehicle price and deposit to see your amount financed. Add a PCP balloon payment to calculate GMFV-based monthly payments.
Set Your APR & Finance Term
Enter your Annual Percentage Rate and term up to 96 months to see monthly payments and total interest. Toggle business use to calculate your HMRC approved mileage allowance.
See Your Full Cost Breakdown
View your total repayable, full amortisation schedule, early repayment savings, APR benchmark against the UK market average, and a side-by-side comparison of two finance deals.
Car Finance Calculator
PCP · HP · Personal Loan · Payments · Schedule · 2026
HP (Hire Purchase): You pay a deposit + fixed monthly instalments covering the car's full value plus interest. You automatically own the car after the final payment — no balloon required. Higher monthly payments than PCP but simpler: no mileage limits, no end-of-term decision, no negative equity risk. After paying 50% of the total, you have the right to voluntarily terminate the agreement with no further liability. Per FCA — Car Finance.
Vehicle Price & Deposit
APR & Finance Term
Business Use & Tax
Business use vehicle?
If you use this vehicle for business, HMRC allows you to claim the Approved Mileage Allowance Payment (AMAP) or a proportion of actual running costs. HMRC AMAPs: 45p/mile for first 10,000 business miles · 25p/mile thereafter.
Finance Summary
Based on a £20,000 vehicle, £3,000 deposit, and £17,000 financed over 48 months at 8.90% APR (HP).
Your monthly payment is £0. Total interest payable: £0. Total repayable: £0.
FCA — Car Finance | HMRC — Approved Mileage Rates | Bank of England — Base Rate
Last verified: April 2026 | BoE base rate: 3.75% · AMAP: 45p/25p per mile
Repayment Schedule
Annual schedule — UK consumer finance uses monthly reducing-balance amortisation. In the early months, most of your payment covers interest; this shifts toward capital over time. The outstanding balance falls fastest in the latter half of the term.
HP and personal loan early settlements may attract an early settlement fee (typically 1–2 months' interest under the Consumer Credit Act). PCP early settlement requires paying the outstanding balance including the GMFV. Check your credit agreement for exact terms. Per FCA.
| Year | Annual Payment | Capital Repaid | Interest Paid | Balance |
|---|---|---|---|---|
| Calculating… | ||||
Interest Breakdown
Interest charges are front-loaded — highest in Month 1, falling each month as the outstanding balance reduces. If you refinance or settle early, you benefit most in the latter portion of the term when most payments are capital, not interest.
Annual Interest Paid
Capital vs Interest Split (Annual)
| Year | Opening Balance | Capital Repaid | Interest Paid | Closing Balance |
|---|---|---|---|---|
| Calculating… | ||||
APR Benchmark
Compare your rate against the Bank of England base rate and current UK car finance market rates. Always compare APR — not just the monthly payment — as it includes all mandatory charges. Per FCA and Finance & Leasing Association.
Rate Comparison
The Bank of England base rate (3.75%, March 2026) is the floor for UK lending costs — car finance rates are always significantly above this. Average UK car finance APRs sit in the 7–14% range depending on credit score, loan size, and vehicle type. 0% APR deals are available on some new EVs as manufacturer incentives. The FCA motor finance redress scheme (launching mid-2026) may affect some customers who had agreements from April 2007–November 2024. Always compare representative APR — at least 51% of customers must be offered the advertised rate or lower. Your personal APR depends on credit score, income, loan size, and term.
Compare Two Finance Deals
Deal A mirrors your main calculator. Adjust Deal B to compare — e.g. a different APR, a shorter term, or a different lender's quote. Same loan amount used for both.
Side-by-Side
| Metric | Deal A | Deal B | Difference |
|---|---|---|---|
| APR | — | — | — |
| Term | — | — | — |
| Monthly Payment | — | — | — |
| Total Interest | — | — | — |
| Total Repayable | — | — | — |
Adjust Deal B settings to compare.
For educational purposes only. Monthly payments are calculated using standard monthly reducing-balance amortisation: PMT = P × [r(1+r)^n] ÷ [(1+r)^n − 1], where r = monthly rate (APR ÷ 12) and n = term in months. This is representative of most UK HP and personal loan products. PCP monthly payments in practice are calculated on the amount financed excluding the GMFV balloon (effectively financing only the depreciation portion) — our PCP calculation shows this correctly.
APR rates shown are illustrative — your actual APR will depend on credit score, income, loan amount, term, and lender. Representative APR means the rate offered to at least 51% of accepted applicants — your personal APR may be higher. Not financial advice. The FCA motor finance redress scheme (mid-2026) may be relevant for agreements from April 2007–November 2024. Always read the full credit agreement before signing.
UK Car Finance Types
PCP, HP, Personal Loan, PCH/Lease — how each works and who owns the car
According to the Finance & Leasing Association (FLA), over 90% of new cars in the UK are bought on finance. Personal Contract Purchase (PCP) dominates with around 60–70% of all new car finance agreements. The right product depends on whether you want to own the car, your deposit size, your annual mileage, and your monthly budget.
| Finance Type | How It Works | Own the Car? | Monthly Cost | Best For |
|---|---|---|---|---|
| PCP Personal Contract Purchase | Pay deposit + monthly payments covering only the car's depreciation, not its full value. At term end: pay the GMFV balloon to own, hand back, or part-exchange. | Option Only | Lowest | Those who want newer cars regularly; lower monthly budgets; not planning to keep car long-term |
| HP Hire Purchase | Pay deposit + fixed monthly instalments on the car's full value. Automatic ownership after the final payment. No balloon, no mileage limits. Voluntary termination after 50% paid. | Automatic ✓ | Mid | Drivers who want to own the car outright; predictable budgets; no mileage restrictions |
| Personal Loan Unsecured | Borrow from a bank/building society; own the car from day one. Unsecured — lender cannot repossess the car. Fixed monthly repayments. No mileage limits. | Immediate ✓ | Mid–High | Good credit borrowers; those wanting full ownership immediately; flexible resale options |
| PCH / Leasing Personal Contract Hire | Monthly rental payments only — you never own the car. Fixed term with agreed mileage allowance. Maintenance often included. Hand back at end. | Never ✗ | Lowest | Drivers who always want a new car; want to avoid depreciation risk; business vehicle users |
PCP mileage limits — watch this closely: PCP agreements require you to agree an annual mileage cap at the start (typically 10,000–12,000 miles/year). Exceeding this triggers excess mileage charges of 10–25p per additional mile at the end of the contract. On a 3-year deal at 15,000 miles/year (vs a 10,000-mile cap), you'd owe for 15,000 excess miles × 15p = £2,250 — payable as a lump sum on return. Always choose a realistic mileage cap — overpaying for higher mileage upfront is almost always cheaper than excess charges. Per FCA.
UK Car Finance Rates & FCA Rules
APR bands by credit score, FCA consumer protections, and the 2026 redress scheme
Per the FCA, all UK car finance lenders must be FCA-authorised. The Annual Percentage Rate (APR) must be disclosed before signing and represents the full annual cost of the credit including interest and any mandatory charges. Representative APR means at least 51% of customers who apply must be offered that rate — your personal APR may be higher depending on your credit profile. The Bank of England base rate is currently 3.75% (held March 2026).
| Credit Profile | New Car APR (April 2026) | Used Car APR | Notes |
|---|---|---|---|
| Excellent Credit 760+ score, stable income | 5%–7% APR | 6.5%–9% APR | Best rates. 0% APR available on some new EVs as manufacturer incentives (e.g. VW ID.4, Renault Scenic). TSB offers from 5.6% representative APR (£7.5k–£25k). |
| Good Credit Most applicants | 7%–11% APR | 9%–14% APR | Most common range. Representative APR from major brokers: ~8.9–10.9%. Rate is set at signing and fixed for the full term. |
| Fair Credit Impaired history or high DTI | 11%–15% APR | 14%–20% APR | Higher risk premium. Consider improving credit score before applying or providing a larger deposit to reduce LTV. |
| Poor Credit / Subprime CCJs, defaults, or very limited history | 15%–40%+ APR | 20%–40%+ APR | Car may be used as security. Always verify total cost of credit — a £15,000 loan at 29.9% over 48 months costs nearly £13,000 in interest. |
FCA Consumer Protections
- ✓FCA-authorised lenders only (check FCA Register)
- ✓APR must be disclosed before signing — legally binding
- ✓14-day cooling-off period after signing credit agreement
- ✓Right to settle early (Consumer Credit Act 1974); fee max 2 months' interest
- ✓HP/PCP: Voluntary Termination after paying 50% of total amount
- ✓Section 75 protection on credit agreements (HP/Personal loan via credit card for deposit)
- ⚠Section 75 does NOT apply to PCP agreements per se — separate FCA protections apply
FCA Motor Finance Redress (2026)
- ✓FCA ending complaint pause: 31 May 2026
- ✓Formal redress scheme expected to launch mid-2026
- ✓Covers ~14 million agreements from April 2007–November 2024
- ✓Relates to undisclosed commission (DCA and non-DCA models)
- ⚠Avg estimated compensation: ~£700 per eligible agreement
- ⚠You do not need to use a claims management company — you can claim directly
Always compare APR — not just the monthly payment: A dealer may show you a monthly payment that looks affordable but over a longer term with a higher APR you could pay thousands more. Example: £17,000 financed at 8.9% APR over 48 months = monthly £422 · total interest £3,270. At 9.9% over 60 months = monthly £361 · total interest £4,660 — lower monthly but £1,390 more overall. Extend the term further and the saving disappears. The FCA requires the APR and total amount payable to be shown clearly. Per FCA — Car Finance.
Source: FCA — Car Finance | FCA — Motor Finance Redress
HMRC Mileage & Vehicle Tax Allowances
Approved mileage rates (AMAPs), capital allowances, and self-employed vehicle deductions 2026
Per HMRC, there are two main methods for claiming vehicle expenses for business use: the AMAP flat-rate mileage method (simplest — covers all running costs per mile) or the actual costs method (claim the business-use proportion of all real expenses including finance interest and capital allowances). You must choose one method per vehicle and cannot switch within the same tax year.
| HMRC Allowance | 2026 Rate | How It Works | Who Can Claim |
|---|---|---|---|
| AMAP — Cars & Vans First 10,000 business miles/year | 45p per mile | Employer pays employee tax-free at or below this rate. Self-employed: claim against Self Assessment. Covers fuel, oil, tyres, servicing, insurance, road tax, MOT, lease/finance interest, and depreciation — all included in the 45p rate. No separate claims permitted. | Employees using personal vehicles for work; self-employed sole traders (simplified expenses) |
| AMAP — Cars & Vans Additional miles above 10,000 | 25p per mile | Rate drops after the 10,000-mile threshold within the tax year (6 April to 5 April). Keep a mileage log recording date, destination, business purpose, and miles for every business trip. | As above |
| Passenger Payment | 5p per mile | Additional payment for each passenger on the same business journey. Both driver and passenger must be employees of the same organisation. | Employee drivers carrying colleagues on business trips |
| Capital Allowances — Electric / ZEV Zero-emission cars (CT: expires 31 Mar 2026) | 100% FYA | 100% First Year Allowance — you can claim the car's entire purchase cost against profits in Year 1. For Corporation Tax: available on expenditure before 31 March 2026. For Income Tax (sole traders): FYA available to 5 April 2026. After these dates, EVs may move to 18% WDA (main pool). | Companies, sole traders, partnerships using actual costs method |
| Capital Allowances — Low Emission 1–50g/km CO₂ (main pool) | 18% WDA | 18% Writing Down Allowance per year on a reducing balance basis. A car costing £20,000: Year 1 claim = £3,600; Year 2 claim = 18% of £16,400 = £2,952; and so on. Multiplied by business-use percentage. | Same as above (actual costs method) |
| Capital Allowances — Higher Emission >50g/km CO₂ (special rate pool) | 6% WDA | 6% Writing Down Allowance on a reducing balance (special rate pool). Much slower deduction — reflects environmental cost. Includes most petrol/diesel cars purchased new from 2009 onward. | Same as above |
Mileage method vs actual costs — which is better? For most drivers, the AMAP rate (45p/25p) is simpler and often produces a higher deduction. Actual costs may be superior if you drive an expensive car with high running costs and very high business mileage. Example: 12,000 business miles at AMAPs = £5,000 deduction. Under actual costs with a £40,000 EV used 70% for business: Year 1 FYA = £40,000 × 70% = £28,000 deduction — clearly superior. But you cannot use both methods. Sole traders using simplified expenses cannot simultaneously claim capital allowances. Per HMRC — Capital Allowances for Business Cars.
Source: HMRC — Approved Mileage Rates | HMRC — Capital Allowances: Business Cars
Company Car Tax — Benefit-in-Kind (BIK) 2026/27
How HMRC taxes employer-provided vehicles and how to calculate your BiK tax bill
A company car provided to an employee for any private use creates a taxable Benefit-in-Kind (BiK). The taxable value is based on the car's P11D value (official list price including extras, excluding first registration fee and VED) multiplied by the BiK percentage set by HMRC based on CO₂ emissions. Employees pay Income Tax on this BiK value; employers pay Class 1A National Insurance (currently 15%) on the same amount.
| Vehicle Type / CO₂ Band | BiK Rate 2026/27 | BiK Rate 2027/28 | Annual Tax (20% taxpayer, £30k P11D) |
|---|---|---|---|
| Fully Electric (BEV) 0g/km CO₂ | 4% | 5% | £30,000 × 4% = £1,200 BiK · Tax: £240/year |
| Petrol/Diesel 0g/km eg. hydrogen fuel cell | 4% | 5% | £240/year |
| Petrol 51–75g/km | 17% | 18% | £30,000 × 17% = £5,100 · Tax: £1,020/year |
| Petrol 76–94g/km | 19% | 20% | £1,140/year |
| Petrol 95–99g/km | 20% | 21% | £1,200/year |
| Petrol 100–104g/km | 21% | 22% | £1,260/year |
| Petrol 120–124g/km | 27% | 28% | £1,620/year |
| Petrol 165g/km+ | 37% | 38% | £30,000 × 37% = £11,100 · Tax: £2,220/year |
| Diesel surcharge For diesel cars not meeting RDE2 | +4% | +4% | Added on top of CO₂ band rate where applicable |
BiK calculation example (2026/27): Company provides an employee a £40,000 petrol SUV emitting 140g/km CO₂ (31% BiK rate). BiK value = £40,000 × 31% = £12,400. Employee pays tax on £12,400 — at 40% higher-rate tax = £4,960/year (£413/month). Compare to an electric car at £40,000: BiK = £40,000 × 4% = £1,600 · tax at 40% = £640/year (£53/month) — a saving of £4,320/year. Employer also saves on Class 1A NI: 15% × (£12,400 − £1,600) = £1,620. This gap makes electric company cars one of the most tax-efficient employee benefits available in 2026. Per HMRC — Company Car Tax.
Source: HMRC — Company Car Tax | Rates confirmed for 2026/27 and 2027/28 tax years
UK Car Finance Formulas
Monthly payment, total interest, APR calculation, and PCP balloon explained
Standard UK reducing-balance amortisation (monthly compounding). Applies to HP and personal loans — you pay principal + interest each month until the balance reaches zero.
P = loan · r = monthly rate (APR ÷ 12) · n = months. Example: £17,000 at 8.9% APR / 48 months → PMT ≈ £422/month
PCP finances only the depreciation portion — the car's current value minus its Guaranteed Minimum Future Value (GMFV). The GMFV balloon is deferred to term end.
where PV_balloon = GMFV ÷ (1+r)^n
GMFV = guaranteed buyout price. Lower monthly because you're only financing the depreciation, not the full value.
The tax-free reimbursement or self-employed deduction for business miles driven in a personal vehicle. Two-tier rate applies within each tax year.
+ max(0, miles − 10,000) × £0.25
Example: 14,000 business miles → (10,000 × 45p) + (4,000 × 25p) = £4,500 + £1,000 = £5,500 total allowance
Benefit-in-Kind tax on a company car is charged on the taxable BiK value — the P11D price multiplied by the CO₂ emission percentage.
Annual Tax = BiK Value × Income Tax Rate
Employer NI = BiK Value × 15%
Example (EV, £40k P11D, 40% taxpayer): £40,000 × 4% = £1,600 BiK · Annual tax = £1,600 × 40% = £640
True cost of finance — HP vs PCP vs personal loan on a £20,000 car, £3,000 deposit, 48 months at 8.9% APR: HP: monthly £423 · total interest £3,280 · you own the car. PCP (£7,000 GMFV): monthly ~£262 · total paid in payments ~£12,600 · GMFV to own = £7,000 · total cost to own = ~£19,600 · handing back = £12,600 total. Personal loan: same as HP but you own from day one and the loan is unsecured. PCP appears cheaper monthly but the true cost of ownership including the balloon is similar to or more than HP. If you plan to keep the car, HP or a personal loan is typically more transparent. Per FCA.
Source: FCA — Car Finance | HMRC — Company Car Tax | HMRC — Mileage
Frequently Asked Questions
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About this calculator
This calculator provides estimates for educational purposes. Interest rates and fees vary by lender and are subject to approval. Rates shown are indicative only and updated regularly but may not reflect current market conditions. Always verify rates directly with lenders before making decisions.