The true cost
Car Finance APR & Interest Calculator (True Cost)
See exactly how APR turns into pounds — the total interest, and why a low monthly can cost more.
Representative APR
5.8%
Total interest
£2,160
What the deal really costs
- Amount financed
- £18,000
- Total of payments
- £20,160
- Total payable (with deposit)
- £22,160
APR turns a monthly figure into a yearly cost you can compare. A lower monthly over a longer term usually means more total interest, not a cheaper deal.
How we work this out
We solve for the monthly rate that makes the present value of your payments equal the amount financed, then convert it to an annual APR. Total interest = total of payments − amount financed.
This is the representative APR implied by your figures.
Full method: how we calculate.
APR is the yearly cost of car finance, including the interest and any compulsory fees. This calculator turns a monthly quote back into an APR and shows the total interest — the true cost behind the headline payment.
What is APR on car finance?
APR (Annual Percentage Rate) is the yearly cost of borrowing, including the interest and any compulsory fees. It's the one figure designed to let you compare deals fairly.
Two deals can show the same monthly payment but very different APRs once you add up the term. The APR captures the whole cost in one number.
Is APR the same as the interest rate?
No — APR includes the interest rate plus any compulsory fees, so it's usually a little higher than the flat or nominal rate.
A flat rate looks lower because it's charged on the whole balance for the whole term. Convert one to a true APR with the flat rate to APR converter.
Why a low monthly can cost more
A lower monthly usually means a longer term — and a longer term piles on more interest. The cheapest-looking deal is often the most expensive.
Worked example
What's a good APR for car finance?
A good APR depends on your credit — strong credit can mean single-digit APRs, while a thin or poor file pushes rates higher.
Your credit score is the biggest lever on the rate you're offered. Improving it before you apply can cut the APR and the total cost.
How to get a lower rate
You cut the APR with a bigger deposit, a shorter term, a stronger credit score, and by comparing offers.
- Put down a larger deposit to borrow less.
- Choose the shortest term you can afford.
- Check your credit file and fix errors before applying.
- Compare deals on APR — see cheapest car finance and 0% deals.
Frequently asked
What is APR on car finance?
Is APR the same as the interest rate?
Does a lower monthly payment mean a cheaper deal?
What is a good APR for car finance?
Work out your next step
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