If you’re searching the market for a brand-new or used vehicle, you’re probably wondering how to figure out your monthly car payments. After all, with inflation and the rising cost of living, most of us are on a strict budget.

Thankfully, it’s relatively straightforward to calculate the amount you owe once you know your loan amount, repayment term and credit rating. Keep reading to find out more.

What makes up your monthly car payment?

We suggest breaking down your monthly car payments into two sections – finance repayments (which you can figure out via a car finance calculator) and vehicle expenses. The former is the amount you’ll pay back towards the total cost of the car, including interest. The latter covers fuel, insurance, tax, service charges and planned or unplanned maintenance.

It’s important to distinguish between the two. While finance repayments are often fixed (they may fluctuate slightly depending on inflation), vehicle expenses vary considerably. This means it’s wise to set aside a few hundred pounds to buffer against emergencies.

How can I calculate finance repayments?

As finance repayments make up the largest chunk of what you’ll owe, it makes sense to start here. You don’t have to do the maths yourself. Instead, use our hassle-free car finance calculator.

How does it work? Simply input your desired loan amount, preferred repayment term and credit rating. Then, you’ll receive an immediate snapshot of your expected monthly costs, typical interest rate and total amount payable.

We know what you’re thinking – how accurate can this really be? Of course, to provide a thorough assessment, we’d need more information, such as your income and debt. However, calculators offer illustrative examples to help you make an informed decision about what you can afford.

As for the amount, it shouldn’t exceed 10% to 15% of your income. After taxes, the average monthly earnings in the UK are around £2,300. This means you should spend between £230 and £345 on car finance repayments.

How can I calculate other vehicle expenses?

Calculating other vehicle expenses is trickier because they fluctuate. One month, you might only need to budget for fuel. The next, you could have an engine malfunction. You never know what’s around the corner. However, you can mitigate risk by purchasing cars (especially used cars) from reputable sellers.

As a rule, you shouldn’t spend more than 20% of your income on total car costs. Going back to the example earlier – let’s say you take home £2,300 per month and spend £230 on finance repayments. You could effectively spend up to another £230 on vehicle expenses without causing too much financial strain.

If you took out a larger loan for a more expensive car, you’ll probably have less money for additional costs. This is something to consider carefully before entering a finance agreement. There’s no point buying a flashy car if you can’t keep it on the road!

How can I decrease my monthly car payments?

There are a few ways you can decrease your monthly car payments, including:

  • Purchase what you need, not what you want
  • Increase your down payment
  • Improve your credit score

Purchase what you need, not what you want

Quite simply, the more expensive the car, the bigger the loan and monthly repayments. While you might want an exciting four-wheel drive with plenty of leg room and high-tech features, you may not be able to live comfortably and honour your other financial commitments while footing the bill.

Increase your down payment

A down payment is a lump sum paid by the customer towards the value of the car. It’s a bit like a house deposit in the sense that it’s deducted from the total amount owed, meaning you have to pay less overall. 

How much should you contribute? It depends. Anywhere between 10% to 20% of the car’s value is ideal – 10% is reasonable for used vehicles.

Improve your credit score

Above all else, improve your credit score. If you have a good or excellent rating, you’ll receive more favourable terms because you’ve proven yourself capable of meeting repayments in the past. On the other hand, people with bad credit scores are considered riskier investments, so lenders tend to bump up the interest rates.

You can improve your credit score by paying direct debits on time, overpaying debt and ensuring you’re on the electoral roll.

Find out how much you could owe today

Want to figure out your monthly car payments? Use our car finance calculator to begin the exciting journey to your next car.

Rates from 9.9% APR. Representative APR 12.4%

Evolution Funding Ltd T/A My Car Credit

My Credit Rating


  • You are a home owner
  • You have been on the electoral role for a long period of time
  • You have current credit arrangements and mortgage with no defaults
  • You have no CCJs, credit arrears or missed payments
  • You rarely apply for credit
  • You are employed or self-employed


  • You are on the electoral role
  • You are a home owner or long standing tenant
  • You have a stable employment history
  • You have current credit arrangements with occasional missed payments
  • You have no CCJs


  • You are or have recently been on the electoral role
  • You may have recently changed address
  • You may have occasional missed payments
  • You may have an old CCJ
  • You may have regularly applied for credit


  • You may have had frequent changes in address
  • You may not be traceable on the voters roll
  • You may have exceeded credit card limits
  • You may have missed payments on current agreements
  • You may have had a CCJ in the past


  • You may not be traceable on the voters roll
  • Your credit cards are over their limits
  • You have recent CCJs
  • You may have been refused credit elsewhere
  • You may be in a debt management plan

X monthly repayments of

Typical rate

Loan amount

Total payable




*for illustration purposes only

No impact on your credit score*

Representative Example

Borrowing £7,500 at a representative APR of 12.4%, annual interest rate (fixed) 12.36%, 47 monthly payments of £196.44 followed by 1 payment of £206.44 (incl. estimated £10 option to purchase fee), a deposit of £0.00, total cost of credit is £1,939.12, total amount payable is £9,439.12.

Evolution Funding Limited, trading as My Car Credit, is a credit broker and not a lender.

Please ensure you can afford the repayments for the duration of the loan before entering into a credit agreement.

*Initial application is a soft search. Should you progress, some lenders may perform a hard search on your credit file.

Require more help?

Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!