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How Much Car Can I Afford?

See how much car you can afford from your take-home pay: the price a monthly payment buys with your deposit, part-exchange and loan rate.

£

A month, after tax

%

£240 a month

£
£

What your car is worth

%

A year

More options· £200 running costs
£

A month: insurance, fuel or charging, repairs

£

Registration and dealer fees

You can afford a car up to

£13,806

With £2,500 up front and £240 a month for 5 years at 9.96%

You borrow
£11,306
Interest
£3,094

With running costs, the car would cost you £440 a month, 18% of your take-home pay.

What this means

A common guide is to keep car payments to about 10% of your take-home pay, and everything the car costs, with insurance, fuel and repairs, under about 20%. A car loses value from the day you buy it, so the less of your income it takes, the more is left for things that grow.

A shorter loan costs less interest and means you won’t owe more than the car is worth. Stretching to 7 years lowers the payment but adds interest, and you may still be paying when the car needs costly repairs. A good used car can cost far less for the same payment.

Next step

How it adds up

You borrow£11,306
Up front£2,500
Car price£13,806
Total interest£3,094
Everything you pay£16,900

Where the money comes from

Paying for the car
  • Deposit£2,500
  • Loan£11,306
Assumptions in this estimate
  • A fixed-rate loan repaid monthly, with the deposit and part-exchange paid towards the car. The starting rate is a typical one: New personal loans averaged 9.96% in August 2026 (Bank of England); car finance rates can be lower.
  • Advertised car prices already include VAT or GST.
  • Your actual rate depends on your credit, the lender and the car’s age. Dealers may offer lower rates on new cars, sometimes in place of a discount.
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How the calculator works

  1. Your payment: a share of your take-home pay, 10% to start.
  2. What it borrows: the loan that payment repays over the term, at the rate you enter.
  3. The car price: the loan plus your deposit and part-exchange, less any fees.
  4. All car costs: the payment plus insurance, fuel and repairs, as a share of your pay.

Example

On take-home pay of £2,400 a month, 10% is a payment of £240. Over 5 years at 9.96%, with a £2,500 deposit, that buys a car of up to £13,806, and you’d pay £3,094 of interest.

Ways to afford a better car

  • Save a bigger deposit: every £1,000 more adds £1,000 to the price without adding interest.
  • Improve your rate: compare a bank or credit union loan with the dealer’s offer before you go.
  • Look at nearly new: a car a few years old has already lost much of its value.

Learn more

See our car loan calculator for the payments on a particular car, the personal loan calculator, and the budget calculator.

Last updated

Frequently asked questions

How much should I spend on a car?

A common guide is to keep car payments to about 10% of your take-home pay, and everything the car costs, including insurance, fuel and repairs, under about 20%. On £2,400 a month, that’s a payment of up to £240.

Is a personal loan or PCP better?

A personal loan or hire purchase means you own the car at the end. PCP has lower monthly payments, but you either hand the car back or pay a large final balloon payment to keep it. Compare the total cost, not just the monthly payment.

How long should a car loan be?

As short as you can manage. A 3 or 4-year loan costs much less interest than 6 or 7 years, and you’re less likely to owe more than the car is worth if you need to sell it.

Is it better to buy a new or used car?

A car loses a large part of its value in its first few years, so a good used car can cost far less for the same monthly payment. New cars often come with lower dealer finance rates and a warranty, which can narrow the gap.