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

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!