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If you need to buy a car and you’d rather not purchase one outright with cash, a bank or lender may be able to provide you with a loan specifically for this purpose. A car loan puts you into an agreement with your lender to borrow a certain amount (generally up to £25,000) that you pay back over a defined period of time. The maximum amount you can actually borrow depends on your personal financial circumstances.

Payments are computed based on the loan’s principal amount with interest added. The benefit of a car loan is that you own the car once you complete your purchase. A car loan is considered a type of personal loan, and there are different options available depending on the loan package you decide to go with.

Loan Calculators
An important point to keep in mind when taking out a car loan is to only borrow what you can afford to pay back. This may seem obvious but lenders may offer you a maximum amount based on factors that only take into consideration the most debt you can possibly afford to repay for the term of the loan, not necessarily how much you could afford in certain circumstances that might render you unable to make timely payments (if you lose your primary source of income for a length of time, for example).

That said, it is very helpful to find out how much you may be offered to borrow in order to determine if the repayments are within how much you want to commit yourself to. Loan calculators are useful tools that compute this information for you. Many loan providers have loan calculators you can use on their websites.