What is a Good APR for Car Finance?

Unlocking a new mercedes

Whether you’re in the market for a budget-friendly Kia Sportage or an all-electric Tesla Model Y, Annual Percentage Rate (APR) is one of the most important metrics to consider when buying a car in the UK. So, what’s a good APR for car finance and why does it matter for British motorists?

In this guide, we’ll answer all your questions about APR, including factors that can influence it and benchmark rates to keep in mind.

The basics of APR

Before we take a closer look at a good APR for car loans, let’s take a moment to define exactly what the acronym means. Expressed as an annual percentage, APR measures the total cost of the loan. It includes the interest rate charged on the borrowed amount plus additional fees charged by the lender. The lower the APR, the less you’ll pay over the lifetime of the loan.  

What is a good APR for car finance?

APR can vary enormously between lenders. As a general benchmark, 10.9% is considered a good APR for a borrower with an excellent credit score. With a good broker, applicants with excellent credit scores shouldn’t need to settle for anything lower than 10.9%.

Why does APR matter for British motorists?

Why take the time to secure a good APR for car finance? Here are a few reasons why APR matters for British motorists:

Affects the total cost of ownership

It’s important to understand that the advertised price of a car doesn’t necessarily reflect the total cost of your loan. A high APR can inflate the overall cost of the vehicle and significantly increase the total cost of ownership. Similarly, a good APR will keep costs as low as possible and help you enjoy the benefits of auto finance. 

For example, the best-selling Nissan Qashqai is currently priced at around £26,000 in the UK. A high APR will push up the price significantly over the lifetime of the loan while a low APR keeps the family-friendly vehicle affordable and accessible to many British motorists.

Determines monthly payments

The option to split the cost of car ownership into bite-sized monthly payments is one of the biggest advantages of auto finance. A good APR for car finance can significantly influence the cost of your monthly payments, so it’s important to shop around for the best deals.

Establishes your budget

APR doesn’t just affect the total cost of your loan. It can also influence your budget and determine the type of cars you can afford. For example, a lower APR may allow you to upgrade from a petrol-powered Vauxhall Corsa to an all-electric version. On the other hand, a higher APR may force you to look at other more affordable models, like a second-hand Ford Fiesta.

Factors that can influence car finance APR

Credit score

Most lenders will consider your personal credit score when calculating APR. A high score means you’re considered low risk by lenders, and vice versa.

Loan term

Lenders will also consider the length of your loan when calculating APR. Shorter loans generally have lower APR while longer terms result in higher rates. Use a car finance calculator to play around with loan term options and compare rates. This is a quick and easy way to secure a good APR for car finance.

Amount borrowed

The total amount borrowed can impact APR. Large loans generally come with lower rates, though this can vary depending on the lender. Consider making a larger down payment to bring down your APR.

Type of finance

The type of loan agreement you choose can affect what APR you’re eligible for. Personal Contract Purchase (PCP) loans generally have the lowest rates while Hire Purchase (HP) can be slightly higher.

Unlock the best APR with My Car Credit

All of the above factors can influence car finance APR and have a big impact on the total cost of your loan. At My Car Credit, we specialise in helping Brits achieve the coveted 10.9% APR and keep the total cost of car finance as low as possible. Even if you have lackluster credit, we can still help you secure a good APR for car finance. Get in touch with a friendly advisor today to discuss your options and get behind the wheel of your next car.

Rates from 9.9% APR. Representative APR 12.4%

Evolution Funding Ltd T/A My Car Credit

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Related articles

What Checks Are Done for Car Finance?

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Try Our Classic Car Financing Calculator

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What is the Average Car Loan Interest Rate?

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  • You have current credit arrangements and mortgage with no defaults
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  • You are employed or self-employed

Good

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Fair

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£

X monthly repayments of
£X

Typical rate

Loan amount

Total payable

X% APR*

£X

£X

*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.
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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!

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Car Loan APR Explained

Lady working out finances in a cafe

Annual Percentage Rate (APR) is one of the most important factors to consider when calculating the total cost of your car loan. Whether you’re shopping for a peppy Volkswagen Golf, an eco-friendly Mini Electric or a luxurious Audi A1, understanding the intricacies of car loan APR is critical when it comes to making smart and informed financial decisions.

In this comprehensive guide, we’ll take a deep dive into APR, explain how it affects your car loan repayments, and provide handy tips on how to unlock the best deals.

Understanding car loan APR

APR stands for Annual Percentage Rate and reflects the total borrowing costs associated with the loan. It includes the interest rate you’ll pay on cash borrowed, as well as additional fees and charges imposed by the lender. The goal is to provide borrowers with a clear idea of the total cost of the loan, including fees. This transparency makes car loan APR one of the most important metrics to consider when crunching your numbers and calculating how much to borrow.

Is APR the same as interest rate?

While car loan APR does factor in interest charged on the cash amount borrowed, it also includes other fees and charges associated with the loan. This makes it a different and more comprehensive metric than a traditional cash interest rate.

Why is APR important?

Car loan APR is one of the best ways to compare loan offers quickly, easily and accurately from different lenders. As mentioned above, APR not only factors in the cash interest rate but includes additional fees and charges. It offers borrowers a glance at the total cost of the loan, expressed using an easy-to-interpret percentage rate. A low APR means you’ll pay less in interest and additional fees over the lifetime of the loan. A high APR means you’ll pay more.

What is a typical APR rate?

In the UK, a typical car loan APR rate offered by a reputable lender should sit at around 10.9% for an applicant with excellent credit. It’s important to understand that most reputable brokers and lenders use representative APR as an example. The actual percentage will vary depending on the applicant. We’ll cover representative APR in more detail below.

Fixed vs variable APR

Most auto loans in the UK come with fixed APR. This means the APR remains constant for the lifetime of the loan and monthly payments stay the same. For borrowers, this provides stability and makes it easy to budget and plan ahead. Car loans with variable APR are less common and can be difficult to manage.

Factors that can influence car loan APR

APR can vary significantly depending on the applicant. Here are a few factors that can influence what APR you’re eligible for:

Personal credit score

Your personal credit score can have a big impact on what car loan APR you are offered. Lenders use your score to assess your credibility as a borrower and calculate risk. Borrowers with high credit scores are generally rewarded with lower APR, and vice versa.

Preferred loan term

The total length of your car loan can affect your APR. Lenders typically offer lower APR for shorter loan terms. Longer terms can result in higher overall APR, though monthly payments are lower which appeals to many borrowers.

Loan amount

The total amount borrowed is another factor that can influence APR. To lower your car loan APR, consider putting together as much cash as possible for your down payment.

What is representative APR?

When researching car loans, you’ll see the term representative APR used by brokers and lenders. This is the rate that at least 51% of customers will receive. Of course, some customers will enjoy lower rates while others will receive higher rates.

Representative APR takes this fluctuation into account and offers borrowers a general idea of what to expect. Ultimately, it’s a transparent way to compare rates offered by different brokers or lenders. The bottom line? Use representative APR as a guide, not a guarantee.

How do I find out the exact APR of a car loan?

You’ll need to continue with your application to get an exact car loan APR quote. Also called a ‘real’ or ‘personal’ rate, the figure is tailored to match your unique credit profile, financial history and personal circumstances.

Ideally, brokers should be able to calculate an exact car loan APR using a soft search. This type of search doesn’t leave a permanent mark on your financial history and won’t affect your credit score or future applications.

Tips for lowering your APR

APR can have a big impact on the total cost of your car loan. So, it makes sense to be proactive when it comes to lowering your APR. Here are some strategies to help you secure the best rates:

Boost your credit score

From paying off outstanding debts to registering on the electoral role, there are a few quick and easy ways to boost your credit score.

Increase your down payment

A larger down payment can reduce the amount you need to borrow, which can help bring down your car loan APR.

Choose a shorter repayment term

While it can be tempting to stretch out your loan for as long as possible to bring down your monthly payments, opting for a shorter repayment term typically reduces APR. In the long run, you’ll pay less.

Score the best APR with My Car Credit

One of the best ways to secure a good car loan APR is to work with an experienced broker. At My Car Credit, we specialise in helping Brits secure finance on all kinds of cars, from zippy Ford Fiestas to adventure-ready Range Rovers. Whatever your budget, financial history or credit score, we can help you unlock the best possible APR from trusted lenders.

Use our handy car finance calculator to get the ball rolling, or get in touch with a friendly member of the My Car Credit team today to find out more.

Rates from 9.9% APR. Representative APR 12.4%

Evolution Funding Ltd T/A My Car Credit

Return to Your Credit Profile
Return to search

Related articles

What Checks Are Done for Car Finance?

Read More

Try Our Classic Car Financing Calculator

Read More

What is the Average Car Loan Interest Rate?

Read More
My Credit Rating

Excellent

  • 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

Good

  • 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

Fair

  • 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

Poor

  • 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

Bad

  • 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
£X

Typical rate

Loan amount

Total payable

X% APR*

£X

£X

*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.
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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!

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or call 01246 458 810

How to Use a Car Payment Calculator – What Can I Afford?

Using car finance calculator on a phone

Shopping for a new car is exciting. From choosing the make and model you like through to deciding on accessories and design features, finding a new car is serious fun. But financing that purchase might be a different matter.

After a house, a car is likely to be the second highest purchase you ever make. As such, finding the money for that purchase may seem overwhelming, as you’re unlikely to be able to pay via cash up front. That’s where car finance can help. Car finance is a credit agreement that allows you to have full use of the car. You simply pay off via a series of pre-agreed monthly instalments plus interest. There are different kinds of car finance, and the right one for you will depend on your circumstances.

One of the key tools that will help you to determine the kind of car finance you can afford is a car finance calculator, and this article breaks down how to use a car payment calculator in order to calculate the kind of loan you can afford.

How to calculate your car finance

If you’ve started your search for car finance, you may have heard of the 20/4/10 rule. Per this rule, you should use the following parameters to find car finance that works within your means:

  • Make a down payment (deposit) of at least 20% of the car’s value
  • Choose car finance for a maximum of four years
  • Only spend 10% of your gross monthly income on the vehicle

Limiting expenditure on the car to 10% of your gross monthly income is arguably the most important thing to remember. Within this percentage, you also need to accommodate the vehicle’s running costs, like its insurance, maintenance expenses and fuel. This will also vary depending on factors including where you live and your annual mileage, but Nerd Wallet reports that it costs an annual average of over £3000 to run a car in the UK.

Establishing the budget that you have to work with for your car finance is therefore a vital first step. It will differ from your peers depending on the above factors (namely your salary and the running costs you can expect to pay for the car). Without establishing this budget in advance, you won’t have all of the information to know what you can afford, so it’s worth doing so before you use a car payment calculator.

Remember, you can often find car finance deals that will allow you to make smaller payments over longer periods of time, but this does mean you’ll be paying more on interest. This is why putting down a large deposit can have serious advantages, as it will make your monthly repayments smaller.

To calculate the kind of car finance loan you can afford, you’ll also need to know your credit score. You can use Experian’s free credit score checker to get this.

Once you’ve taken stock of your financial situation and set out a budget you can work with, you can use our car finance calculator to get an indication of what you’ll be able to borrow from us via an APR, a monthly repayment figure, total cost of credit and total amount payable.

What’s the APR?

All of the above factors will determine the annual percentage rate of interest (APR) that you’ll pay on your car finance.

You can get an exact APR (also known as a personal APR) by filling in our car finance calculator and choosing the ‘Apply now’ button. From there, you fill in a form which provides us with your personal information and financial history, as well as the kind of deal you’re looking for. We can then give you an APR.

Find out more about car finance today

If you have further questions or concerns about car finance, you can contact My Car Credit on enquiries@mycarcredit.co.uk. Our friendly team of specialists is on hand to address any queries you have, and will help to find you a finance agreement that works for your unique needs.

Rates from 9.9% APR. Representative APR 12.4%

Evolution Funding Ltd T/A My Car Credit

Return to Car Finance Options
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Related articles

Financing a Second-Hand Car: 4 Options

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Leasing vs Finance: What’s the Difference and Which is Better?

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How Does Auto Finance Work?

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My Credit Rating

Excellent

  • 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

Good

  • 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

Fair

  • 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

Poor

  • 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

Bad

  • 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
£X

Typical rate

Loan amount

Total payable

X% APR*

£X

£X

*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.
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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!

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How to Reduce APR on a Car Loan

Family with laptop looking how to reduce APR on a car loan

Brits are no strangers to car loans, with the latest statistics revealing around two million cars are purchased on finance every year. With so many benefits on offer, it’s no surprise so many British motorists embrace car loans.

As the APR has to be disclosed prior to the signing of any paperwork, you can look around and get a car finance quote that outlines the APR you’ll likely be paying. By implementing the seven steps below, you may be able to either reduce APR on a car loan, or find a deal that feels more manageable for your circumstances.

7 steps to reduce APR on a car loan

1.    Improve your credit score

Your credit score is one of the most significant determiners of your APR. If you’ve missed previous payments, your score will be lower, and your APR is consequently going to be higher.

Essentially, the higher your credit score, the more likely you are to qualify for a low APR. If you don’t immediately need to purchase a new vehicle, it might be worth waiting whilst you build your credit score up over time.

2.    Apply with a co-signer

If you do have a poor credit score but need a vehicle immediately, you’re more likely to secure a low APR if you apply with a guarantor with strong credit. This essentially spreads the risk of the loan out, which makes you more attractive to a lender.

A guarantor is responsible for repaying any missed payments – or even to pay the loan back in full should the circumstances require it. Bear in mind also that any missed payments by you will show up on their credit score.

Being a guarantor is a huge responsibility and so it is important that both you and your guarantor understand what is involved before going ahead.

3.    Go for a shorter repayment term and don’t borrow too little

Shorter repayment terms will typically have lower interest rates. You’ll end up paying more with your monthly repayments, but the APR overall will be lower. Similarly, don’t go for a loan of only a few thousand pounds. Because these smaller loans are paid off far quicker, they’ll tend to have higher interest rates. It’s a far better idea to wait and save up the amount that you need than taking a low loan with a high APR on it.

4.    Choose a cheaper car

It’s pretty simple – if you borrow less money, your APR will be lower. You may feel that you want the expensive car with all the add-ons, but this might mean that you’re having to borrow serious amounts of money. Your monthly repayments will consequently be higher, and so will your APR.

Look for a cheaper vehicle and take out a smaller car finance loan. Consider, too, whether you might get a better finance deal on a new car than on a used car. This might seem contrary but used cars will have higher mileage and more wear and tear, which makes them more vulnerable to breakdown. These are all factored in by lenders when they propose an APR.

5.    Pay out for a larger down payment

If you’re willing to put down cash for a larger down payment, you pose less risk to a lender. As a result, you’re likely to have a lower APR. You’ll also pay less overall because you won’t be borrowing so much.

6.    Refinance your car

Depending on the terms of your car finance, you may be able to refinance your vehicle partway through the agreement. If you refinance your car, you’ll typically apply to a new lender, who will pay off your existing loan and replace it with a new one. This new one may have a lower APR, and might also have lower monthly repayments, depending on what you’re able to negotiate.

7.    Prepare to negotiate and shop around

Depending on the lender you’re looking at, you may be able to negotiate to lower the APR. Many will show you pre-approved rates, meaning there might be the potential to reach an alternative agreement.

Alternatively, it’s in your best interest to shop around. Take the time to investigate different deals offered from different lenders and find one that works for you.

Get a quote today

If you’re shopping around for car finance, don’t forget to use My Car Credit’s car finance calculator. Since we look for the best deal from our large panel of lenders, we may be able to reduce APR on a car loan compared to other car finance companies. What’s more, we’ll only ever do a soft credit check when calculating a quote for your car finance needs. As such, you can get a better idea of how much it will cost without increasing your APR in the long run!

Rates from 9.9% APR. Representative APR 12.4%

Evolution Funding Ltd T/A My Car Credit

Return to Car Finance Options
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Related articles

8 Advantages and Disadvantages of a Balloon Payment

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No Deposit Car Finance – How Does it Work?

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How to Refinance a PCP Balloon Payment

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My Credit Rating

Excellent

  • 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

Good

  • 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

Fair

  • 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

Poor

  • 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

Bad

  • 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
£X

Typical rate

Loan amount

Total payable

X% APR*

£X

£X

*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.
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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!

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or call 01246 458 810

Car Finance APR: What Does it Mean?

Man signing a car finance deal
You need to buy a car but don’t have the money. Thankfully, your bank balance doesn’t mean you have to forfeit one of life’s main necessities. Car finance is on hand to provide the resources you require to own a vehicle.

Most people understand what the process entails, whether it’s opting for a hire purchase or a lease purchase with balloon payment. However, APR is something you’ll come across when searching for car finance and you might not know what it means. What is car finance APR? Keep reading to find out.

What is car finance APR?

The simplest way to understand APR is to view it as interest. The acronym stands for Annual Percentage Rate, and it’s the amount added on in interest yearly. It also includes any compulsory charges. APR continues to be included within your repayments deal until the deal is over and you either give the car back or own it outright.

How does it work?

APR works in the same way that most interest rates work. In terms of car finance, the dealership you choose will use a standard measure to calculate the amount of interest you need to pay. The higher the rate, the more you’ll pay back in the long-term.

What Can APR Affect?

Car finance APR mainly impacts how much you will pay over the course of a contract. The figure isn’t taken into account within the deal as it’s added on afterwards. Therefore, it’s essential to figure how much it is and whether you can afford it before signing on the dotted line.

Finance APR is a good indicator of offers as you can use the rate to compare quotes with other dealers on the market. For example, if everything is the same except for the APR, you could save a significant sum.

My Car Credit’s finance calculator

At My Car Credit, we recognise the need to be transparent, which is why we have a loan calculator tool you can use free of charge. If you ever wonder, ‘can I get car finance?’ you don’t need to wait too long to find out!

Of course, you can always contact a team member and discuss your options with them directly.

Rates from 9.9% APR. Representative APR 12.4%

Evolution Funding Ltd T/A My Car Credit

Return to Your Credit Profile
Return to search

Related articles

What Checks Are Done for Car Finance?

Read More

Try Our Classic Car Financing Calculator

Read More

What is the Average Car Loan Interest Rate?

Read More
My Credit Rating

Excellent

  • 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

Good

  • 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

Fair

  • 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

Poor

  • 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

Bad

  • 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
£X

Typical rate

Loan amount

Total payable

X% APR*

£X

£X

*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.
Reviews icon
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Why You Should Steer Clear of Low Rate Car Finance Promises

Frustrated lady on laptop trying to find low rate car finance

Buying a brand-new or used car is often a serious investment. It can be tempting to offset costs by opting for a car finance agreement that guarantees astonishingly low interest rates.

However, when something sounds too good to be true, it usually is! In reality, finance companies can't promise low rate car finance for all applicants. This is because they’re calculated based on individual credit scores and circumstances.

How are interest rates calculated?

So, shiny promises aside, how is car finance interest calculated? The outcome depends on many variables, including a person’s credit history, income, desired vehicle model and deposit. 

Without a doubt, a person’s credit score is the most significant factor. This is a rating everyone has based on their financial history. This rating helps lenders to determine potential risk, interest rates and credit limits. It’s used to gauge someone’s trustworthiness and likelihood to pay back instalments. A good credit score increases your chances of securing a lower interest rate and overall monthly repayments. 

However, at My Car Credit, we understand that unforeseen circumstances can impact a person’s credit rating through no fault of their own. This is why we’re open to accepting applications from people with less than perfect financial backgrounds.

If you’d like to improve your chances of securing finance, there are plenty of simple ways to bolster your rating and generate more favourable interest rates before applying.

We can help you find the best possible interest rates

Whilst we would never promise you a low interest rate, we are in a great position to find you the best deal on car finance for your circumstances. We have the largest panel of lenders out of any UK car finance broker. This gives us the best chance of matching you to a lender with the most desirable interest rates. 

To start your journey, speak to one of our knowledgeable team members by calling 01246 458 810 or emailing enquiries@mycarcredit.co.uk. 

Rates from 9.9% APR. Representative APR 12.4%

Evolution Funding Ltd T/A My Car Credit

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My Credit Rating

Excellent

  • 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

Good

  • 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

Fair

  • 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

Poor

  • 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

Bad

  • 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
£X

Typical rate

Loan amount

Total payable

X% APR*

£X

£X

*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.
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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!

Email
or call 01246 458 810

Representative APR and exact APR in car finance (a quick and simple guide)

dog on bed whilst woman obtains exact apr on car finance

Shopping for a car can kick up a whole new world of car finance lingo, which can become overwhelming! Terms such as interest rates, APR, Representative APR, real rates, exact APRs can leave your head in a jumble as to what it all means. We’ve summarized below what you need to know in a quick and simple guide which should leave you seeing the wood for the trees when it comes to car finance jargon.

What is an interest rate?

An interest rate is the cost each year of borrowing an amount of money. It is expressed as a percentage of the total amount borrowed.

For example, if you borrow £1000 and you are charged a 10% interest rate, you’ll pay an additional £100 on top of the original £1000, so £1100 in total.

What is an APR?

‘APR’ stands for Annual Percentage Rate. This starts with the annual interest rate and also takes into account any additional fees, charges and final payments. The APR shows you the total cost of a finance deal – the higher the APR, the more you pay back over the life of the loan.

APRs help you compare finance products accurately on a like-for-like basis. The FCA (Financial Conduct Authority) requires all lenders and brokers (including car dealers) to state the APR of any financial deal on offer.

When shopping around, always compare one APR with another, along with the total amount you’ll pay back.

What is a representative APR?

The representative APR is often used to promote a financial offer, and is used to show the cost of credit for the majority of borrowers. It is calculated as the rate that is offered to at least 51% of customers.

The representative APR is important because it means that nearly half of customers will be given a rate more than the representative APR. This is especially true where you have poor or bad credit. However, those with an excellent or good credit rating will usually be given a better rate than the representative APR.

The important thing to remember is that not all customers are eligible for a lender’s best rate of interest, and so the representative APR is a better indication of what you could be offered if you don’t have a perfect credit file.

What is an exact APR?

An exact APR takes into consideration your personal circumstances, your credit profile and financial history, and your current financial situation. It is therefore an accurate calculation of the total amount you will pay back.

The exact APR is sometimes called a ‘personal APR’ or ‘real rate’ since it is tailored to you and your circumstances.

The lender will perform a credit check (or credit search) to calculate an exact APR. The healthier your credit score and credit history, the less risk for the lender, and the lower your exact APR.

With My Car Credit, we start every car finance application process off with a soft search, which means that no mark is left on your credit file. Wherever possible, we give you an exact APR using soft search. This means you can obtain a ‘real rate’ quote on car finance from My Car Credit without worrying about it showing up on your credit history.

How can I calculate car finance?

Even knowing what all of this car finance jargon means, it can still be very complex to calculate car finance. This is why we have a free Car Finance Calculator, which you can use to work out your typical APR (dependent on whether your credit score is excellent, good, fair, poor, or bad), your monthly repayments, your total cost of credit, and the total amount payable over the term.

Try using our Car Finance Calculator. Alternatively, you can search for a quality used car from our approved dealers, and calculate finance on a specific vehicle. It’s as easy as that!

We hope this has helped you understand the world of car finance a little bit better, and if you need any help or advice, our Car Credit Specialists are here to help!

Rates from 9.9% APR. Representative APR 12.4%

Evolution Funding Ltd T/A My Car Credit

Return to Application Process
Return to search

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What is a Good Credit Score for Car Financing?

Read More
My Credit Rating

Excellent

  • 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

Good

  • 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

Fair

  • 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

Poor

  • 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

Bad

  • 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
£X

Typical rate

Loan amount

Total payable

X% APR*

£X

£X

*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.
Reviews icon
TrustPilot icon

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!

Email
or call 01246 458 810