How much car loan can I get on my salary?

Roman Danaev22 December 2025

Share

A sensible starting point is a car payment equal to about 5–10% of your net monthly income, because lenders base affordability on take-home pay rather than headline salary. This range generally keeps your Payment-to-Income Ratio (PTI) stable, which is exactly what lenders want to see when judging whether a repayment fits your budget.

A higher salary increases your potential loan size, but only alongside manageable commitments. Existing debts raise your Debt-to-Income Ratio (DTI) and can restrict approval even on strong incomes. Meanwhile, your eventual maximum affordable loan Amount depends on how your loan term, APR, and deposit interact, since these directly change how far your chosen monthly payment will stretch.

Quick salary-to-payment guide

• £1,800 net/month - £90–£180
• £2,400 net/month - £120–£240
• £3,200 net/month - £160–£320

These figures broadly match lender affordability modelling and help you form a realistic expectation before applying.

And the key point remains: the lender’s maximum approval shows what is technically viable, but your safe monthly payment is what determines long-term comfort.

Is Payment-to-Income Ratio (PTI) different from Debt-to-Income Ratio?

PTI and DTI measure different things. PTI compares just the new car payment to your income, showing whether that single repayment sits comfortably month to month. DTI compares all your existing debts to your income, giving lenders a full picture of how stretched your finances already are. PTI helps size the car payment; DTI determines whether your overall borrowing is still manageable.

How your income really affects what you can borrow

Your net income is what determines how much car finance you can handle, because lenders care about the money that actually reaches your account after tax and NI. A £30,000 salary often drops to about £2,000 net per month, and that reduction directly limits the payment you can sustain.

Lenders then look at your disposable income (what’s left after essential bills and existing debts). This is the figure your car payment must fit into, which is why two people on the same salary can borrow very different amounts. Low rent and no debts create more room, while heavy commitments push your DTI higher and reduce affordability.

Once you base your expectations on net and disposable income rather than headline salary, your true borrowing range becomes far clearer.

How your outgoings limit the loan you can afford

Your outgoings often restrict your borrowing more than your salary, because lenders judge whether a new payment fits within your disposable income rather than your headline pay. Rent or mortgage costs, utilities, food, transport, insurance and childcare all reduce the amount available for a car payment, and this trimmed-down figure is what lenders trust when assessing stability.

Existing debts matter just as much. Credit cards, loans, overdrafts and BNPL increase your Debt-to-Income Ratio (DTI), and a high DTI warns lenders that adding another repayment could push your budget too far. Two people earning the same salary can receive opposite outcomes simply because one carries heavier commitments.

Once you measure your outgoings honestly, your real borrowing capacity becomes clear and it usually differs from what a lender might approve on paper.

How to set a safe monthly car payment

A safe car payment starts with what you can genuinely spare each month. Once you know your net income and outgoings, you can see your disposable income, and your car payment should take only a small portion of it. For most people, staying around 5–10% of net income keeps the PTI comfortable and leaves room for rising bills and one-off costs.

Then stress-test that figure. Ask whether you could still manage it if rent rose, a bill increased, or your income dropped slightly. A car loan runs for years, so your number has to survive normal bumps in life, not just look good today. The amount that still feels safe after that test becomes your working monthly payment and the anchor for calculating your actual loan size.

Turning your monthly payment into a loan size

Your monthly payment sets the boundary, but the loan size depends on how it interacts with the loan term, APR, and deposit. A longer term lowers the monthly cost and allows a larger loan, but it increases total interest and may slow your equity build-up, so lenders still monitor your Loan-to-Value Ratio (LTV).

A higher APR reduces the loan amount that fits within your payment band, which is why two people with similar incomes can receive different loan offers. Your deposit has the quickest impact: a stronger deposit reduces the amount borrowed and lowers risk, while a low or zero deposit raises the LTV and limits the final figure. Once these variables fit comfortably within your monthly limit, your realistic loan size becomes clear.

What UK lenders check behind the scenes

Lenders follow a regulated creditworthiness assessment to judge whether a new car payment will remain affordable throughout the agreement. Their checks fall into clear categories:

1. Verified and Stable Income
   • Focus on net income, not gross.
   • Review payslips, bank statements and sometimes employment status.
   • Use income to calculate PTI and assess how the new payment fits your budget.
2. Existing Credit Commitments
   • Analyse credit cards, loans, overdrafts and BNPL agreements.
   • Calculate your Debt-to-Income Ratio (DTI) to see how stretched your finances already are.
   • Higher DTI reduces borrowing capacity, even when salary is strong.
3. Essential Living Costs
   • Estimate realistic spending on housing, utilities, food, transport and childcare.
   • Check whether enough disposable income remains after these costs to support the new repayment.
4. Credit File and Payment Behaviour
   • Review payment history, missed payments, defaults and account conduct.
   • Look for patterns that indicate stable financial management.
5. Loan Structure and Deposit Strength
   • Assess how Loan Term, APR and Loan-to-Value Ratio (LTV) affect long-term affordability.
   • Low deposits increase risk and may limit the amount that can be financed.
6. Regulatory Requirements
   • Follow Financial Conduct Authority (FCA) rules on responsible lending.
   • Decline or limit applications if the repayment might become unsustainable.

Choosing the right finance product for your budget

The right product is the one that fits your monthly limit without increasing long-term pressure.

1. Personal Contract Purchase (PCP)

PCP keeps payments lower because a large portion of the car’s value is deferred into a balloon payment at the end. This makes it easier to stay within your monthly range, especially if your Payment-to-Income Ratio (PTI) needs to stay modest. However, the lower payment comes with tighter conditions. You don’t build equity quickly, the Loan-to-Value Ratio (LTV) can run high, and you rely on the car holding its value to avoid negative equity when the agreement ends. PCP works best for drivers who prioritise flexibility and don’t need to own the car outright immediately.

2. Hire Purchase (HP)

HP pushes more of the car’s cost into the monthly payments with no balloon at the end, so instalments are usually higher than PCP. But the structure is straightforward, you build equity faster, and you own the car once the final payment is made. HP suits borrowers who want stronger ownership security and prefer a predictable path without mileage rules or end-of-term conditions. If your disposable income allows for a slightly higher payment, HP often provides clearer long-term value.

Real salary examples to make it concrete

Seeing real numbers makes the whole idea far easier to judge, because the same salary can support very different borrowing levels depending on debts, rent and disposable income.

Example A: Single person earning £25,000

A £25,000 salary usually gives around £1,750 net each month. After rent, bills and modest living costs, most people in this bracket have tight disposable income, so a payment near the lower end of the range works best.

• Safe payment: £90–£140 per month
• Likely outcome: A reliable used car on HP, or a lower-value PCP with a modest deposit.
• Why: Limited headroom and a need to keep DTI stable.

Example B: Individual earning £35,000

Take-home pay sits around £2,300–£2,400 net, leaving more space once essentials are covered. With fewer debts, the PTI remains healthy and lenders usually offer more flexibility.

• Safe payment: £120–£200 per month
• Likely outcome: A mid-range used car or newer model via PCP, depending on deposit strength.
• Why: Better disposable income and stronger affordability margins.

Share