Personal Loan Car Purchase Calculator

Information and how to use

Using a personal loan can be a cost-effective way to purchase a new or used car. Loan rates are generally lower than other methods of finance like HP or PCP as the criteria to get the loan is tougher. The loan can also be used to purchase a used or second-hand vehicle and this can be advantageous if the purchase is coupled with a good warranty - close to fixed price motoring on a used vehicle.

When you look at new car prices such as those supplied via contract hire, a fixed monthly payment (after deposit) is attractive as all costs are covered such as depreciation, finance costs and repairs. You can emulate these factors with a used car using our calculator.

A personal loan spread over a longer term than your ownership period of the car will have lower monthly payments. We find out what the true cost once the vehicle has been sold and the loan settled is by looking at interest cost and depreciation cost.

You can optionally add a warranty cost to factor in a contiguency fund for repairs.

It is an interesting comparison with buying a car using contract hire - look at the top contract hire deals to see what is available at the same monthly cost. You will find that although the vehicle may be older, the class of car for the same price will likely be much higher. Conversely, lower depreciating cars with cheaper warranties can be owned at a much lower monthly cost.