- APR (Annual Percentage Rate)
- The most important and transparent figure when comparing car loans. It includes both interest rates, establishment costs, and all ongoing fees, showing you the total, true cost of the loan.
- Depreciation
- The amount the car loses in value over time and mileage. For almost all cars, this is the absolute largest and most expensive cost of car ownership.
- Down payment / Deposit
- The cash amount you pay upfront when buying the car. For a standard car loan, a deposit of at least 20% of the car's price is usually required to get the best interest rate.
- HP (Hire Purchase)
- A straightforward finance option where you pay a deposit and fixed monthly payments. You own the car once the final payment is made. No mileage restrictions, unlike PCP.
- HPI check
- A vehicle history check (by HPI or similar providers) that reveals outstanding finance, insurance write-offs, stolen status, and mileage discrepancies. Essential before buying a used car privately.
- Loan term / Duration
- The period (in months or years) over which your car loan must be fully repaid.
- Outstanding finance / Debt
- The debt that still needs to be paid off on the car from a previous owner. It is critical to check if there is registered outstanding finance on the car before buying privately, as the debt stays with the car – not the person.
- PCP (Personal Contract Purchase)
- The most popular form of car finance in the UK. You pay a deposit and monthly payments, then choose to make a final balloon payment to own the car, hand it back, or part-exchange. Mileage limits apply.
- VED (Vehicle Excise Duty)
- The annual tax for keeping a vehicle on the road, commonly called "road tax." For cars registered after April 2017, the first-year rate depends on CO2 emissions; after that, a flat standard rate applies. Zero-emission vehicles are currently exempt.
- Vehicle tax / Road tax
- The recurring tax you pay to the government for owning a car. The tax is typically calculated based on the car's CO2 emissions for newer vehicles, or fuel consumption for older vehicles.