Car finance calculator

To apply for car finance in the UK, you'll typically need proof of identity, proof of address and proof of income.

A valid UK driving licence or passport covers identity. For address, a recent utility bill or bank statement (usually within the last three months) does the job. Proof of income is usually your last three payslips, or if you're self-employed, your latest tax return or SA302 form.

Some lenders may also ask for your bank statements to verify affordability, and you'll need your National Insurance number as part of the credit check process. Having these ready before you apply tends to speed things up considerably.

There's no universal minimum credit rating required to get car finance; different lenders have different thresholds, and some specialise specifically in finance for people with poor or limited credit history. That said, a stronger credit score will almost always get you access to better rates and more product options.

Most credit reference agencies in the UK score you differently, so the number itself matters less than the band you fall into (poor, fair, good, excellent and so on). If your score is on the lower end, you may still be approved but at a higher APR, which increases your monthly payments and total repayment.

Car.co.uk works with a broad panel of lenders, which means there are options available even if you have a weak credit score or history. That said, it's worth checking your credit report before applying so you know where you stand. And if there are any errors on it, getting those corrected first can make a meaningful difference.

There's no fixed minimum deposit required for car finance. Some lenders will even offer zero-deposit deals, meaning you borrow the full value of the car.

That said, putting down a deposit if you can afford to is generally a smart move. It reduces the amount you're borrowing, which lowers your monthly payments and the total interest you'll pay across the term.

A deposit of around 10% of the car's value is a common starting point, but more is better if it's within reach. 

At the end of a PCP agreement you have three options: pay the final balloon payment (also called the Guaranteed Minimum Future Value, or GMFV) to own the car outright, hand the car back to the lender with nothing further to pay, or use any equity in the car as a deposit on your next PCP deal.

The balloon payment is set at the start of the agreement and represents the lender's estimate of what the car will be worth at the end of the term. If the car is worth more than the GMFV on the open market, you have positive equity, which is useful if you want to part-exchange or roll into a new deal.

If you've exceeded the agreed mileage limit or the car has damage beyond fair wear and tear, you may face additional charges when handing it back.

You cannot change your car if you still have outstanding finance on it, you must first settle the debt. Technically the lender owns the vehicle until the agreement is paid off, so the finance needs to be cleared as part of the process.

If you want to get out of the deal without paying it off yourself, the most common route is part-exchanging at a dealership, who will handle settling the outstanding finance directly.

If the car is worth more than what you owe (positive equity), the difference can go towards your next deal. If you owe more than the car is worth (negative equity), you'll need to cover that gap either upfront or by rolling it into the new finance agreement, though the latter increases your new loan amount so it's worth being aware of what you're taking on.

If you're on a PCP deal, you also have the option of using the voluntary termination right under the Consumer Credit Act once you've paid off 50% of the total amount payable. This lets you hand the car back without penalty.

A representative APR is the interest rate that at least 51% of approved applicants will actually receive. It's the headline rate lenders are legally required to advertise.

The "representative" part is important: it doesn't mean everyone gets that rate. Up to 49% of approved customers could be offered a higher APR depending on their credit profile and individual circumstances.

APR stands for Annual Percentage Rate and includes both the interest rate and any mandatory fees, so it gives you a more complete picture of the borrowing cost than the interest rate alone.

Yes, you can get car finance if you're self-employed; lenders just need to verify your income differently to how they would for a salaried employee. Instead of payslips, you'll typically need to provide your last two to three years of tax returns or SA302 forms, along with your tax year overviews from HMRC.

The main thing lenders are trying to establish is that your income is stable enough to cover the repayments comfortably. Irregular income makes this trickier, but it doesn't disqualify you.

In many cases you can be approved for car finance the same day you apply, and sometimes within hours. The exact timeframe depends on the lender, your credit profile and how quickly you provide the required documents. Straightforward applications with clean credit histories move fastest.

If additional checks are needed (for example if you're self-employed or there are queries around your credit file), it’ll take a little longer. Even still, most applicants have a decision within one to two working days.

The most common way to finance a car in the UK is through one of three products: Hire Purchase (HP), Personal Contract Purchase (PCP) or a Personal Loan.

With HP you pay off the full value of the car in monthly instalments and own it at the end. PCP works similarly but with lower monthly payments and a large optional payment at the end if you want to keep the car. A personal loan means borrowing the money independently and buying the car outright, so you own it from day one.

The right option depends on whether ownership matters to you, how much flexibility you want at the end of the term and what monthly payment you're working within. Use our calculator to get a feel for the numbers, then compare which product structure suits your situation best.