What is a good interest rate for a car loan?

In Europe, typical car loan rates range from 4–9% APR depending on credit score and lender. In the US, new car loan rates average 6–8% APR. A lower credit score will result in higher rates.

Car Loan Calculator — Monthly Payments & Amortisation

Vehicle price

€

Down payment

€

Annual interest rate

Loan term

Monthly breakdown

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per month

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Loan amount

—

Total interest

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Total repaid

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Interest as % of loan

Amortisation schedule

Month	Payment	Principal	Interest	Balance

About the Car Loan Calculator

This calculator uses the standard annuity formula to compute your exact monthly payment and shows the complete amortisation schedule — every payment broken down into principal and interest.

How to use it

Enter the vehicle price and your down payment — the calculator works out the loan amount automatically
Enter your lender's annual interest rate (APR)
Choose your loan term — longer terms mean lower monthly payments but more total interest

Total cost of borrowing

The interest as % of loan figure shows how much extra you are paying relative to the loan amount. At 6.9% over 60 months, you typically pay around 19% extra in interest.

Car loan vs PCP vs HP — which is right?

The three common car finance structures differ significantly in what you own and owe. A personal loan gives you immediate ownership with no mileage restrictions. HP (Hire Purchase) works like a loan secured on the car — you own it after the final payment. PCP (Personal Contract Purchase) has lower monthly payments but a large optional balloon payment at the end; you may not own the car without paying it.

Personal loan — own the car outright from day one, no mileage limits, flexible
HP (Hire Purchase) — secured on the car, fixed payments, own it after final payment
PCP — lowest monthly payments, large balloon payment at end, built-in flexibility to hand back
PCH/Lease — never own the car, fixed monthly rental, maintenance often included

Frequently Asked Questions

How is the monthly payment calculated?

The standard annuity formula: P × (r(1+r)^n) / ((1+r)^n − 1), where P is the principal, r the monthly rate, and n the number of months.

What is a good car loan rate?

In Europe, typical rates are 4–9% APR. In the US, 6–8% APR for new cars. Your credit score is the biggest factor.

Should I put more money down?

Yes — a larger down payment reduces principal, monthly payment, and total interest. 10–20% down is commonly recommended.

What credit score do I need for a car loan?

UK lenders do not publish exact score thresholds, but a score above 700 (Experian) or "Good" (Equifax, TransUnion) typically qualifies for mainstream car finance rates. Below this, specialist lenders offer finance at higher rates. Your credit score is not the only factor — income, employment stability, and existing debt also influence approval and rate.

Can I pay off a car loan early?

Yes, under the Consumer Credit Act you have the right to settle a regulated credit agreement early. The lender can charge a maximum of 58 days' interest as an early settlement charge. Request an early settlement figure from your lender — it includes remaining capital plus any permitted charge minus a statutory rebate of future interest.