The Bank of England kept its Bank Rate at 3.75% at its September meeting, but three of the nine members voted to raise it. With the next decision due on 5 November 2026, here’s what the base rate means for car finance, and what doesn’t change.
In short
Most car finance has a fixed interest rate, so a change in Bank Rate doesn’t affect an agreement you already have. It can affect the rates offered on new deals. With inflation above target and three members voting for a rise, rates on new finance are more likely to hold or edge up than fall in the short term.
What the Bank of England decided
At its meeting ending 16 September 2026, the Monetary Policy Committee voted 6–3 to hold Bank Rate at 3.75%. The three members who disagreed wanted a rise to 4%.
Inflation was 3.1% in August, above the 2% target, and the Bank expects it to rise to around 3¾% at the end of 2026. It says the risks are “tilted to the upside”. The next decision is on 5 November 2026.
Does it affect my existing car finance?
Usually not. HP and PCP agreements almost always have a fixed interest rate for the whole term. Your monthly payments won’t change if Bank Rate rises or falls.
Some personal loans and business finance products have variable rates, so check your agreement if you’re not sure.
Will new car finance get more expensive?
Car finance APRs don’t follow Bank Rate exactly. They also depend on the lender’s funding costs, competition, manufacturer offers and your credit history. But if rates rise, or markets expect them to, new deals can become a little more expensive.
As a rough guide, a 0.25 percentage point change in APR on a £15,000 loan over four years changes the monthly payment by only a couple of pounds. Your credit profile, the deposit and the length of the term usually make a much bigger difference.
What you can do
- Compare the APR and the total amount payable, not just the monthly payment.
- Look at manufacturer deals, which are sometimes subsidised and less tied to Bank Rate.
- Check your eligibility with a soft search before applying, so you don’t leave several hard searches on your credit file.
- Already have finance at a high rate? You can settle early and usually get a rebate of future interest. Refinancing only makes sense if the new deal costs less overall.
Interest rate FAQs
Will my car finance payments go up if interest rates rise?
Not if your agreement has a fixed rate, which most HP and PCP agreements do.
Is now a good time to take out car finance?
It depends on your circumstances more than on Bank Rate. If you need a vehicle, focus on finding a deal you can comfortably afford, with the lowest total cost.
When is the next Bank of England decision?
5 November 2026.
Source: Bank of England Monetary Policy Summary, September 2026.