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How AffordEMI works out what you can afford in the United Kingdom
Two numbers drive everything on this page: the payment formula lenders use, and the share of your income they will let that payment take. For the United Kingdom the conservative ceiling is 40% of net monthly income across all your obligations, and a stretched approval reaches 50%. The default rate is 8.9% a year on vehicle finance and 10.5% on two-wheelers, which are market averages rather than an offer to you.
The formula
EMI = P × r × (1+r)ⁿ ÷ ((1+r)ⁿ − 1), where P is the amount financed after your down payment, r is the annual rate divided by twelve, and n is the term in months. Reducing balance, monthly rest, no balloon and no final lump sum — every instalment shown clears the debt in full by the end of the term.
Why 40% and not more
Your existing commitments come out first, so what remains is genuinely available rather than theoretical. The dashed mark on the meter sits at 20% of income, which is where most planners put the vehicle on its own, because fuel, insurance, servicing and parking are never inside the instalment. The gap between that dashed mark and the 40% line is the difference between what a lender will approve and what leaves you room to live.
Questions people ask about car finance in the United Kingdom
Does this model PCP or HP?
Hire purchase. Every payment here fully amortises the balance, so at the end of the term you own the car and owe nothing. Most UK new-car finance is PCP, where a large optional final payment sits at the end and the monthly figure looks smaller for the same car. If you are comparing against a PCP quote, expect this calculator to look more expensive — it is comparing a car you will own against one you will hand back.
How much of my salary should a car cost in the UK?
Lenders look at total monthly commitments against net income, and around 40% is a conservative ceiling once rent or mortgage, credit cards and existing loans are counted. For the car alone, the dashed mark at 20% of take-home is the sensible target. Remember that VED, insurance, and ULEZ or congestion charges in London sit outside the finance payment entirely.
What is the difference between APR and a flat rate?
APR is the annual cost on a reducing balance and includes compulsory fees; a flat rate is charged on the original amount for the whole term and looks roughly half as expensive as it is. This calculator uses APR-style reducing balance throughout. If a dealer quotes you a flat rate, the true APR is close to double it — always ask for the APR and the total amount payable in writing.
Is a used car cheaper to finance?
The price is lower but the rate is usually higher, and older cars attract shorter maximum terms. The gap has narrowed as used values softened. The catalogue here is new vehicles; for used, take the safe EMI figure this page gives you and use it as your ceiling when you search listings.
Where the prices come from
List price including VAT for popular variants on sale now, curated by hand rather than scraped live. VED, insurance and London ULEZ or congestion charges sit outside the finance payment entirely. Prices move constantly — treat every figure here as a starting point and confirm with the dealer before you commit to anything.
What this page never does
- No account, no login and no email address to run a calculation.
- Your salary is never sent to a server. The maths runs entirely in your browser.
- Sharing a result encodes your inputs into the link, so you choose who sees them.
- No lending, broking or advice. See the disclosure for how this site is funded.