Car loan rules in United Kingdom
- UK APR is an effective rate: it compounds the monthly rate and includes arrangement, admin and option-to-purchase fees. That makes it higher than the flat or nominal rate dealers sometimes mention.
- Personal Contract Purchase (PCP) is the most common way to finance a new car. Monthly payments cover the drop in value and you choose at the end to pay the optional final payment (GFV), hand the car back, or part-exchange it.
- You can settle early at any time. The lender’s charge is capped at 1% of the amount repaid early, or 0.5% with a year or less left, never more than the interest you would have paid, and nothing if you repay £8,000 or less in any 12 months (Consumer Credit Act s.95A).
- You have 14 days to withdraw from a credit agreement (Consumer Credit Act s.66A).
Sources: FCA CONC App 1 · Consumer Credit Act s.95A. Rules checked October 2026.
How to use this calculator
Choose Find my APR and enter the price, your down payment, the term and the monthly payment from your offer. The calculator works backward to the APR that lenders in United Kingdom must disclose, and shows the same loan as a nominal rate and an effective rate. Choose Find my payment to turn a quoted rate into a monthly payment. All figures are in GBP and you can switch country at the top of the page.
Frequently asked questions
How is APR calculated on UK car finance?
UK APR is an effective annual rate. It compounds the monthly interest rate and includes required fees such as arrangement and option-to-purchase fees. A loan with an 8.58% nominal rate has an APR of about 8.93%.
Can I work out a PCP payment with this calculator?
Yes. Enter the optional final payment (GFV, the guaranteed future value) in the final payment box. The calculator spreads the rest over your monthly payments and shows the APR.
How much does it cost to settle car finance early?
Under the Consumer Credit Act the lender’s charge is capped at 1% of the amount repaid early, or 0.5% with a year or less left, and never more than the interest you would have paid. There is no charge if you repay £8,000 or less in any 12 months.
When can I hand back a PCP or HP car?
Under voluntary termination you can end the agreement once you have paid half the total amount payable, including fees and the final payment. Use the negative equity calculator to see how far you are from that point.