Get a feel for monthly vehicle finance repayments with our free car finance calculator
Finding the right vehicle finance deal starts with understanding the potential monthly payments you can afford. Here at Octane Finance, we offer an easy-to-use online car finance calculator to estimate your repayments.
We proudly provide tailored finance solutions for cars, vans, and motorbikes through our extensive panel of lenders in the UK. Our free finance tool allows you to input details to automatically calculate a personalised monthly payment estimate for your vehicle. This helps give you a clear snapshot of costs to check if the price matches your budget.
Once you’re ready to proceed, our expert advisors reach out to our lending partners to find real approved finance rates to best fit your needs. Get started by clicking on our finance calculator, below.
How do I calculate car finance?
First of all, you need to determine the car's price after any down payment (initial deposit) has been made - this is the amount you will finance. If you know the loan's interest rate and repayment period offered by the lender, then you can calculate the monthly payment using this formula:
- Monthly payment = amount borrowed x flat rate of interest x number of loan years ÷ number of loan months
Using our free online car finance calculator below can help automatically work out the figures after you input the variables.
How is car finance interest calculated?
An annual percentage rate (APR) is agreed upon when taking out car finance - this includes the headline interest plus any additional fees - common rates are around 12% APR.
It’s worth remembering that rather than paying just for the original amount borrowed, the monthly interest rate is then charged on the outstanding balance owed each month, which will be the total amount payable.
What is a good APR rate for car finance?
A good APR rate for car finance in the UK is generally considered to be between 9% and 12%. Compared to historical benchmarks, there has been nearly a 2% increase in average interest rates offered across the market in recent years, largely due to broader economic conditions like high inflation and rising base rates prompted by the cost of living crisis.
Lenders have also tightened approval criteria, making financing above 10% APR more common for average borrowers compared to previous years. However, well-qualified applicants can still get very competitive deals from prime lenders, so please speak with us to find out more about the APR you could be offered on car finance.
Free finance calculations at your fingertips
We encourage you to use the handy Hire Purchase (HP) or the Personal Contract Purchase (PCP) vehicle finance calculator below to get a feel for your monthly payments. It’s completely free of charge and regardless of what type of finance product you use, you have peace of mind knowing that here at Octane Finance, we have a huge panel of lenders lined up ready to find you the best car finance rates.
Frequently asked questions
Here are some of the most frequently asked questions about Personal Contract Purchase
- What are the advantages to using PCP?
PCP Finance normally requires a solid credit record but once approved, this means that monthly payments are reduced and more affordable or customers can aspire to own a newer or more expensive vehicle due to the structure of the finance product. The main advantage with PCP finance is that by using a final optional "balloon payment" you are able to reduce the monthly payment element of car finance or you can elect to hand the car back at the end of the agreed PCP period.
- What are the minimum and maximum payment periods for PCP?
Between 24 and 48 months.
- What about Excess Mileage?
With PCP car finance, when you set up the agreement you estimate your annual mileage for that car. The finance company wants to predict what the value of the car will be in case you choose to hand it back at the end of the agreed term ( normally 36 or 48 months) so this is why you need to estimate your mileage. If you do more mileage than you predicted then you will need to make an excess mileage payment which is calculated on a pence per mile rate - normally about 12 pence/mile but can be substantially higher or indeed, lower so you should make allowance for this when estimating your annual mileage.
- What is a "balloon payment"?
A balloon payment is a final payment that needs to be made on a PCP deal, if and when you choose to keep the car at the end of the PCP period. It is normally a sizeable amount so some people who want to keep the car at that point look to refinance the outstanding balloon payment amount. You do not have to make the final "balloon payment" - provided the car only has fair wear and tear and is within the mileage allowance, you can opt to just hand the car back to the finance company.
- Can I get a PCP deal?
This very much depends on your credit score. PCP is only really an option for Near Prime and Prime customers. Why is it the case that you need better credit to get PCP finance? Simply because the margins on PCP are less than HP and the finance company is taking a risk on the customer and also on the car itself. When people opt to hand the car back at the end of the PCP term then the finance company takes a risk on depreciation on the car.
Frequently asked questions
Here are some of the most frequently asked questions about Hire Purchase
- What are the advantages to using HP?
Hire Purchase gives you the clarity of knowing what set amount you have to pay monthly till the end of the agreement. If you do high mileage or need flexibility in the mileage you and do any don't want to incur expensive excess mileage charges then HP is ideal. Using HP also means that you dont have to come up with a large balloon payment at the end of the contract and...best of all, you own the car outright at the end of the agreement.
- What are the minimum and maximum payment periods for HP?
Between 24 and 60 months.
- Can I get out of my HP Agreement?
Yes! All Finance companies must give the option for you to settle payment during the course of the agreement. You simply need to contact the finance company and ask for a "settlemet figure" (sometime known as a redemption statement). When this is paid, the car is yours and the finance company will transfer full ownership to you.
- Is Hire Purchase (HP) known as something else
Conditional Sale ( CS) is very similar to HP, the main difference is that at the end of the agreement you need to make a purchase payment ( generally very small) in order to take ownership whereas with Conditional Sale on the final monthly payment the car automatically becomes your property.
- Can I use "Voluntary Termination" under a Hire Purchase Contract?
Yes. Voluntary Termination (VT) is typically applied when more than half what is owed on the car at the start of the agreement has been paid off. You may want to VT for a number of reasons but provided you are past the half way point or you "make good" on paying half of the total amount ( incl any fees ) then under the Credit Consumer Act 1974 you have the right to VT using the "rule of half".