APR is the number that tells you how much car finance actually costs. It stands for Annual Percentage Rate and it includes the interest plus any fees the lender charges, wrapped into one yearly figure. A lower APR means cheaper borrowing. A higher one means you pay more.
The problem is that most people have no idea whether the rate they have been offered is any good. Is 9.9% decent? Is 14.9% a rip-off? Is 20% normal if your credit is not great? This guide gives you the benchmarks so you can tell.
Want to see what APR you could get? Check your eligibility via Brumble with a free soft search that will not affect your credit score.
There is no single "good" APR. What counts as a competitive rate depends on your credit history, the car you are financing, and the type of deal you choose. But here are the ballpark figures for the UK in 2026.
| Your Credit | Typical APR Range | What This Means |
|---|---|---|
| Excellent | 3% - 7% | The best rates on the market. Clean history, stable income, low existing debt. |
| Good | 7% - 11% | Competitive. Most UK borrowers with a reasonable track record land here. |
| Fair | 11% - 19% | Higher but not unusual. May have missed payments or a thin credit file. |
| Poor | 19% - 40%+ | Specialist lenders. If you are in this bracket, improving your score first could save you a lot. See our bad credit car finance page for options. |
Used cars tend to attract slightly higher APRs than new cars because lenders see them as higher risk. The difference is usually 1 to 3 percentage points. So if you are looking at used car finance, a rate at the higher end of your bracket is not unusual.
FCA research from 2025 found the average reported interest rate was around 7.4% for new cars and 8.5% for nearly new vehicles. Around 55% of finance holders had deals below 6.99%, while 19% were paying above 15%.
Percentages are hard to feel. Here is what different APRs actually cost on the same car, so you can see the difference in real money.
All four examples below are based on a £15,000 car, with a £1,500 deposit, financed over 4 years on HP. These are illustrative figures to show the impact of APR. The actual rate you are offered will depend on your personal circumstances.
| APR | Monthly Payment | Total Interest | Total You Pay |
|---|---|---|---|
| 6.9% | £323 | £1,004 | £16,004 |
| 9.9% | £339 | £1,772 | £16,772 |
| 14.9% | £365 | £2,920 | £17,920 |
| 24.9% | £418 | £5,564 | £20,564 |
The difference between 6.9% and 24.9% on the same car is over £4,500 in interest. Even the gap between 6.9% and 9.9% is £768. That is real money, and it is why checking your eligibility before you walk into a dealership matters.
Always compare the total amount payable, not just the monthly figure. A lower monthly payment can hide a longer term and more interest. The total is the only number that tells you the true cost.
When a lender advertises "9.9% APR", that is their representative APR. It means at least 51% of people who are accepted will get that rate or better. The other 49% could be offered something higher.
Your personal APR is based on your own credit profile. Two people buying the same car from the same lender on the same day could be offered completely different rates. The advertised figure is a guide, not a promise.
This is exactly why using a soft search eligibility check is so useful. It shows you the rate you are likely to be offered, based on your actual situation, before you commit to a full application. You can check your eligibility via Brumble without any impact on your credit score.
Your APR is not random. Lenders calculate it based on how risky they think it is to lend to you. Here is what moves the needle.
Your credit score. The single biggest factor. A higher score means a lower rate because the lender sees you as less likely to miss payments.
The amount you borrow. Borrowing more can sometimes get you a slightly better rate, but it also means paying more interest in total.
The term length. Longer terms sometimes come with higher APRs. And even if the APR is the same, a longer term means more months of interest, so the total cost is higher.
Your deposit. A bigger deposit reduces the amount you borrow, which can improve the rate you are offered and lowers the total interest. Our guide on no deposit car finance explains the trade-offs if you cannot put money down upfront.
New vs used car. New cars often qualify for lower rates, sometimes including manufacturer-backed promotions. Used car finance rates are typically 1 to 3 percentage points higher.
Type of finance. HP and PCP can have different rates even from the same lender. Personal loans from banks sometimes beat both if your credit is strong. Our PCP vs HP guide compares them in detail.
The lender. Different lenders offer different rates for the exact same borrower. This is why comparing matters. A broker searches multiple lenders at once, which is how you avoid overpaying.
Yes and no. With 0% APR, you genuinely pay no interest on the borrowed amount. The monthly payments add up to exactly the price of the car minus your deposit. No more, no less.
But 0% deals are almost always offered by car manufacturers on new cars only. They are used to shift specific models, and the "cost" of the interest-free lending is usually built into the car's price. You might find the same car is available with a cash discount elsewhere that works out cheaper overall than taking the 0% offer.
0% APR is rare on used cars. If you see it advertised, read the terms carefully. Check whether there is an arrangement fee, a compulsory product (like GAP insurance) bundled in, or restrictions on the model or spec you can buy.
If you are shopping for the lowest overall cost, our guide to getting the best car finance deal walks through how to compare properly.
Check your eligibility in minutes with a free soft search. No impact on your credit score.
Check Your EligibilityCredit is subject to status. If you proceed to apply, a hard search will be carried out which may impact your credit score.
Check your credit report before you do anything Look for errors, make sure you are on the electoral roll, and pay down any easy wins like credit card balances. Even a small improvement in your score can shift you into a better rate bracket.
Use an eligibility check first A soft search shows you what rate you are likely to get without affecting your score. Check your eligibility via Brumble before visiting a dealer.
Put down the biggest deposit you can More deposit means borrowing less. Borrowing less often means a better rate and always means less interest paid. If you have a car to trade in, its value counts as deposit.
Choose a shorter term A 36-month deal will often cost less in total than a 48-month deal, even if the monthly payment is higher. The interest has fewer months to build up.
Compare, compare, compare Do not accept the first offer. Different lenders can offer very different rates for the same person on the same car. A broker compares multiple lenders at once, which is how you find the best deal without applying separately to each one.
Consider the type of finance If you have strong credit, a personal loan from your bank could beat both HP and PCP rates. If you want lower monthly payments, PCP will be cheaper per month but may cost more overall. Our guide to how car finance works explains each type.
For most borrowers with good credit, 9.9% is a reasonable rate on used car finance. It sits within the competitive range for the UK market. On new cars, you might expect lower. On a £15,000 car over 4 years, 9.9% APR means roughly £1,770 in total interest. If you can get a rate closer to 7%, you would save around £770 on the same deal.
It depends on your credit profile. For someone with good credit, 14.9% is higher than it should be and worth shopping around to beat. For someone with fair credit or a limited credit history, 14.9% may be a reasonable offer from a mainstream lender. On a £15,000 car over 4 years, 14.9% means roughly £2,920 in interest, nearly double what you would pay at 6.9%.
20% is in the higher end of the market and typically indicates a bad credit lending scenario. If your credit is fair or better, it is worth comparing other options because you may be able to find something considerably lower. If your credit is poor and 20% is the best you have been offered, it may be worth considering whether improving your score first could save you a significant amount over the term.
Yes. 28% is well into specialist lending territory. On a £10,000 car over 3 years, 28% APR would mean paying roughly £4,600 in interest alone, nearly half the car's value again on top. If you have been quoted this rate, it is worth checking your credit report for errors, registering on the electoral roll, and considering whether waiting a few months to improve your score could bring the rate down significantly.
There is no fixed rule, but most financial guidance suggests keeping your total monthly car costs (finance payment, insurance, fuel, maintenance) to no more than 10 to 15% of your take-home pay. Lenders will run their own affordability checks before approving you, but their calculation is based on what you can technically repay, not what leaves you comfortable. It is worth doing your own budget first.
According to FCA research from 2025, the average reported interest rate was around 7.4% for new cars and 8.5% for nearly new vehicles. However, the average does not tell you what you personally will be offered. Your rate depends on your credit score, the car, the lender, and the type of finance. Checking your eligibility with a free soft search is the most accurate way to find out.
Very rarely. 0% APR is almost always a manufacturer promotion on specific new car models. It is not widely available on used cars. If you see 0% advertised on a used car, check the terms carefully for arrangement fees, compulsory add-ons, or inflated car prices that offset the interest-free lending.
Yes. HP and PCP can carry different rates even from the same lender. Personal loans from banks sometimes offer lower APRs for borrowers with strong credit, but they are unsecured and typically available only for lower amounts. Comparing all three types is the best way to find the lowest overall cost for your situation.
Credit scores are calculated differently by the three main agencies (Experian, Equifax, TransUnion), so there is no universal answer tied to a single number. A score that Experian considers "good" roughly maps to the 7% to 11% APR range for car finance, though the exact rate depends on the lender, the car, and your wider financial picture. The only way to know for certain is to run a soft search eligibility check.
APR takes the total cost of borrowing over the life of the agreement (interest plus any compulsory fees), expresses it as a yearly percentage, and accounts for compound interest. You do not need to calculate it yourself. Every lender must show you the APR before you sign, and it is the single best number for comparing one deal against another because it includes everything.
With dealer finance, there may be some room for negotiation, especially if you have a competing offer from a broker or bank. With broker-arranged finance, the rate is set by the lender based on your credit profile, so there is less to negotiate directly. The most effective way to get a lower rate is to compare multiple lenders, which a broker does for you automatically.
Compare HP and PCP deals from a wide panel of lenders via Brumble. Free eligibility check, no impact on your credit score.
Compare Car Finance via BrumbleCredit is subject to status. Representative 19.8% APR. If you proceed to apply, a hard search will be carried out which may impact your credit score.
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