UK Car Loan Calculator

Car finance adverts almost always lead with a monthly payment figure, which makes it easy to compare deals on the wrong basis. This calculator works out your actual monthly payment for a personal loan, Hire Purchase (HP) agreement, or PCP-style deal with a balloon payment, plus the total interest and total amount you will pay over the whole term.

How to use the car loan calculator

Enter the car's price, any deposit you are putting down, the value of a part-exchange car if you have one, your loan term in years, and the APR you have been quoted. Leave the balloon payment at £0 for a standard loan or HP agreement, where you pay off the full amount and own the car at the end. Enter a balloon amount to model a PCP-style deal, where a lump sum remains due at the end if you choose to keep the car.

The calculator shows your monthly payment, the total interest you will pay, and a year-by-year summary of how the balance reduces over time, so you can see exactly how a balloon payment changes the shape of the deal compared with a standard loan.

How the calculation works

The amount you actually need to finance is the car's price, minus your deposit, minus any part-exchange value. For a standard loan or HP deal with no balloon, the monthly payment uses the same annuity formula behind our loan repayment calculator, spreading the full amount evenly across the term so the balance reaches zero at the end.

For a PCP-style deal with a balloon payment, the maths changes: the monthly payment only needs to cover the amount financed minus the present value of the balloon, since the balloon itself is paid separately as a lump sum at the end. This is why PCP monthly payments are usually noticeably lower than an equivalent HP deal for the same car and term, even though you have not paid off the full value of the car by the end.

Worked example

Take a car priced at £20,000, with a £2,000 deposit and no part-exchange, financed over 4 years at 8% APR.

As a standard HP loan with no balloon, the calculator shows a monthly payment of around £439, with total interest of roughly £3,093 over the four years, and you would own the car outright once the final payment is made.

Now add a £6,000 balloon payment in the calculator above, modelling a PCP-style deal on the same car, deposit, term and APR. The monthly payment drops to around £333, noticeably lower, but a £6,000 lump sum becomes due at the end if you want to keep the car, and total interest over the deal rises slightly to around £3,982, since you are borrowing a larger effective amount for longer.

Common mistakes to avoid

The biggest mistake is comparing deals purely on the monthly payment. A PCP deal will almost always look cheaper per month than an equivalent HP deal or personal loan, but that is because a chunk of the car's value has simply been deferred to the end, not because the deal itself is cheaper. Always compare the total amount payable, including any balloon payment, to see the full picture.

It is also easy to underestimate running costs alongside the finance payment itself. A cheaper monthly finance payment does not help if fuel, insurance and road tax push your overall motoring budget beyond what you can comfortably afford. Use our fuel cost calculator alongside this one to see the fuller monthly cost of running a specific car, not just financing it.

Finally, watch the APR closely rather than focusing only on the deposit or monthly figure a dealer highlights. A slightly lower APR can save a meaningful amount of interest over a multi-year term, and it is always worth getting a comparison quote from a bank or independent lender before signing a dealer finance agreement.

Related calculators

If you drive in London, our Congestion Charge and ULEZ calculator and London driving charges guide cover the daily costs that come on top of your finance payment. Check your car's real-world running costs with our MPG calculator and fuel cost calculator, and see how your annual road tax (VED) bill compares by fuel type and CO2 emissions.