Affordability comes first
A lender takes your income, subtracts your regular commitments and essential outgoings, and looks at what is left. The monthly payment has to sit comfortably inside that — not just fit, but leave room.
This is a regulatory requirement, not a preference. Lenders have to lend responsibly, which means satisfying themselves that you can maintain the agreement without hardship.
The three levers
Once affordability sets your monthly payment, three things determine the vehicle you can buy.
- Deposit — every pound reduces the amount borrowed and the interest paid on it.
- Term — a longer term lowers the monthly payment but increases total interest.
- Product — a PCP will reach a higher vehicle price for the same monthly payment than HP, because part of the value is deferred to the balloon.
Stretching the term is the most common way people reach a vehicle they want. It is not automatically wrong, but be clear about the trade: a 60-month term on a vehicle you will keep for three years can leave you in negative equity when you come to change.
A worked illustration
The numbers below are illustrative only and are not a quote. They show how the same monthly budget reaches different vehicle prices depending on term and deposit.
| Monthly budget | Deposit | Term | Approximate vehicle price |
|---|---|---|---|
| £250 | £0 | 48 months | around £9,500 |
| £250 | £2,000 | 48 months | around £11,500 |
| £250 | £0 | 60 months | around £11,000 |
| £350 | £2,000 | 48 months | around £15,500 |
Budget for the whole cost
The finance payment is not the cost of running a vehicle. Before you settle on a monthly figure, account for the rest.
- Insurance — get a quote on the specific vehicle before you commit, not after.
- Vehicle Excise Duty, which varies significantly by emissions and list price.
- Servicing, MOT and tyres.
- Fuel or charging, based on your actual mileage.