How Much Car Can I Afford in 2025? A Realistic Guide for UK Drivers

23 Jun 2025

How Much Car Can I Afford in 2025? A Realistic Guide for UK Drivers
Buying a car is one of the biggest financial decisions most of us make. But in 2025, with the cost of living still biting and car finance options evolving, many UK drivers are asking the same question: how much car can I actually afford?

In this guide, we’ll break down a smart approach to budgeting for your next car, explain how lenders assess affordability, and show you how to avoid overstretching yourself, all while still getting the car you want.

Why Car Affordability Matters More Than Ever
A car should give you freedom, not financial stress. But with rising interest rates, increased vehicle excise duty (VED), insurance premiums, and fuel prices, it’s never been more important to do the maths before signing a finance deal.

At Autodosh, we believe in smart, realistic car finance, the kind that fits your life, not just your wishlist.

The 20/4/10 Rule: Does It Work in the UK?
You may have heard of the American “20/4/10” rule:

20% deposit

4-year term

Monthly costs no more than 10% of your take-home pay

While it’s a helpful guide, it doesn’t always suit how car finance works in the UK. PCP and HP plans often don’t require large deposits, and many drivers stretch to 5-year terms to keep payments low.

Instead, think of it like this:
Keep your total monthly car costs (finance + fuel + tax + insurance) under 15% of your net income. That keeps your budget flexible for life’s other surprises.

Step-by-Step: How to Calculate Your Car Budget
Here’s how to work out a realistic monthly car budget in five simple steps:

1. Know your monthly income (after tax)
Use your net salary or average earnings if self-employed.

2. List your essential outgoings
Include rent/mortgage, food, utilities, childcare, debt repayments and subscriptions.

3. Set a sensible car budget cap
Aim for no more than 15% of your monthly income, including:

Finance repayments

Insurance

Road tax (VED)

Fuel

Servicing & MOT

4. Don’t forget upfront costs
Some deals need a deposit, while others don’t. Always check if there are setup fees or balloon payments.

5. Leave yourself a buffer
Cars go wrong. Tyres wear out. Insurance premiums rise. Budget for the unexpected too.

Deposit or No Deposit: What’s Smarter in 2025?
A deposit reduces your monthly payments and could improve your approval odds. But not everyone has cash saved.

With Autodosh, we work with lenders who offer no-deposit car finance, meaning you can still get on the road, even if you’ve not got a big lump sum ready.

What Do Lenders Look At?
Affordability checks are now stricter than ever. Expect lenders to assess:

Your income (payslips or bank statements)

Your monthly outgoings

Your credit score & payment history

Stability (e.g. employment length, address history)

If you’re self-employed, lenders may ask for more documentation — like SA302s or accountant’s letters.

Free Tools to Help You Decide
Soft search finance check – see your chances before you apply

Car affordability calculators – plug in your numbers

Free credit report tools – know where you stand before applying

Final Thoughts: Stay Realistic, Stay in Control
The best car is the one that fits your life, not just your driveway.

Whether you’re upgrading, downsizing or buying your first car, always base your finance choice on what you can comfortably afford each month. Leave room for savings, repairs and real life.

Ready to Find Out What You Can Afford?
Use our free eligibility checker to see your personalised finance options, with no credit impact and no pressure.
Just a few details and you’ll instantly see what cars and deals are within reach.

Click here to check your car finance eligibility now!

Let Autodosh help you drive smarter in 2025.

 

Editorial Disclaimer: Opinions expressed here are the author’s alone, and not those of any bank, credit card issuer or any other company. This article has not been reviewed, approved or otherwise endorsed by any of these organisations. NB: The information on this page does not constitute financial advice, please do your own research to ensure that the product / service is right for your individual circumstances.