How rate changes affect the cost of your car

So you’re looking to buy a car, but you’re unsure of when exactly to buy it. Interest rates are on the rise globally so it may be the time to fix in and secure a deal now before the current rates go up and your monthly payments increase.

A one percent increase may not sound like a lot at first, but when it comes to a car it can certainly add up. We’re here to help you understand what the differences could be dependent on when you secure a car.

Below we have featured four incrementally increased interest rates from the same lender (BNP Paribas in this case), all of which were quoted at the same time, so the final instalment/balloon is exactly the same. We have chosen to do this so you get an example of how the cost of a car could go up between rate changes if you were quoted on either side of a rate change. Different lenders will give different balloons for a vehicle so that’s something to bare in mind when comparing quotes.

For our example, we have used a 2018 (18) Porsche 718 Cayman S, which has 18,000 miles on the clock, with a 10% deposit (the average/recommended deposit) so that the figures below show you exactly how much more you would pay at a higher interest rate.

Let’s start with the current rate

Disclaimer – Each of these quotes is accurate as of 14/10/22, we are using these as a representative example to illustrate the difference a rate change can make. Figures can change dependent on multiple factors and your own figures may not represent the numbers we have here.

7.9% APR

Total Cash Price£51,990.00
Net Deposit£5,199.00
Amount of Credit£46,791.00
Interest Charges£11,054.42
Total Payable£63,054.42
Monthly Payment£702.86
Final Installment/Balloon£24,811.00
APR7.9%
Term48 Months

8.9% APR

Total Cash Price£51,990.00
Net Deposit£5,199.00
Amount of Credit£46,791.00
Interest Charges£12,420.71
Total Payable£64,420.71
Monthly Payment£731.93
Final Installment/Balloon£24,811.00
APR8.9%
Term48 Months

9.9% APR

Total Cash Price£51,990.00
Net Deposit£5,199.00
Amount of Credit£46,791.00
Interest Charges£13,779.48
Total Payable£65,779.48
Monthly Payment£760.84
Final Installment/Balloon£24,811.00
APR9.9%
Term48 Months

10.9% APR

Total Cash Price£51,990.00
Net Deposit£5,199.00
Amount of Credit£46,791.00
Interest Charges£15,131.20
Total Payable£67,131.20
Monthly Payment£789.60
Final Installment/Balloon£24,811.00
APR10.9%
Term48 Months

A quick comparison

Rate7.9%8.9%9.9%10.9%
Monthly Payment£702.86£731.93£760.84£789.60
Interest Charges£11,054.42£12,420.71£13,779.48£15,131.20
Total Payable£63,054.42£64,420.71£65,779.48£67,131.20

Now you can see the difference across a total of 3% in rate changes, what are your thoughts? That 3% difference equates to another £86.74 per month, over 10% above the lowest quote, that’s a total of £4163.52 extra over the course of the agreement. Now depenedent on the lender, a higher rate may actually work out at cheaper monthly payments if their balloon is bigger so the rate isn’t always the thing to focus on if what you’re looking for is a monthly budget match.

If you think that locking in at the current rate is the option for you, head over to the calculator and get a quote in seconds.