Research reveals Brits splash more cash on annual holidays than family car

New research has revealed the average monthly amount those across the UK spend on their car - and the total is surprisingly low at £235 per month, which is, on average, just 11% of people’s monthly income.

Our research showed that when comparing car payments to luxuries, an average family of four splash more cash on an annual family holiday than their car. A week-long holiday to a popular European destination during peak season can cost £1,588 per person on average, meaning a family of four will need to budget around £529 per month to save over the year.

What's more, the research also revealed the cheapest cars to finance, with the lowest monthly payment coming in at £116. In comparison, consumers can bag themselves a car for less than the monthly payment of the popular hobby, Reformer Pilates - which can cost up to £220 at some premium studios.

The cheapest cars to finance based on average monthly payments:

1. Rover - £116
2. Perodua - £126
3. Daihatsu - £132
4. Microcar - £145
5. Chevrolet - £171
6. Saab - £176
7. Smart - £188
8. Fiat - £189
9. Dacia - £201
10. Dodge (USA) - £202

Interestingly, when comparing the average car finance payment by postcode, Lancaster came up top as the cheapest, with the monthly payment sitting at £211 - around 20% cheaper than the national average.

On the other hand, Scotland towns land themselves as the most expensive places to finance your car, with Kirkwall (£271), Lerwick (£265), and Hebrides (£262) taking the top three spots.

The top 10 UK postcode areas with the lowest car finance payments (per month):

1. Lancaster - £211
2. Cardiff - £222
3. Hull - £225
4. Taunton - £226
5. Peterborough - £226
6. Portsmouth - £226
7. Dundee - £226
8. Harrogate - £226
9. Bournemouth - £226
10. Hereford - £227

Over the past few years, the increase in car finance cost has risen slower than the rate of inflation between 2022 and 2025 (11%). The increase in car finance cost is also lower than average salary hikes (19%).

Our motoring expert here at First Response Finance, Jonathan, comments on the data:

"These findings show that purchasing a car on finance is increasingly affordable among UK consumers.

"Total weekly pay has risen from £602 in January 2022 to £716 in February 2025, so if people are considering purchasing a car, they should assess their affordability against their monthly income - they'll be surprised.

"There are also ways to reduce your monthly car finance bill even further, too - you could do this by boosting your credit score to get a more competitive rate, choosing a cheaper make and model as per the list of cheapest models, to paying a bigger lump sum deposit or extending the length of your repayment plan.

"As always, it is important to note though that finance applications are assessed based on a range of individual circumstances, not just location or income."

For more information, check out the full car finance index here! 👈