What is a Settlement Figure?

A settlement figure, when talking about car finance, is the amount of money you still owe on your loan or finance agreement, including interest. It might be important to know this figure if you need to sell or replace a car before your car finance agreement ends. 

Can I settle my car finance early?

The short answer is, yes. And it might help you save money overall; depending on the terms of your agreement, the quicker you can pay off your car finance agreement the less interest you’ll pay.  

If you want to sell your car, the first thing to do is contact the finance company and ask them for a settlement figure – the amount of money it will cost to pay off your loan in full. This figure is typically valid for a certain time frame. If your direct debit is due, make sure to ask how this will affect the figure.  

Alternatively, if you have a hire purchase agreement, you could sell your car privately when you’ve finished making repayments at the end of the loan term.

What does my settlement figure mean? 

Your settlement figure is the amount you’ll need to pay when ending your finance agreement early. Remember that the lender owns the car until the balance is paid off in full or a settlement figure has been paid to end the agreement. If you don’t do this, buyers running background checks on the car will see that it still has outstanding finance to pay. It’s important to note the details of your agreement though, as some lenders will not allow you to sell the car before the finance is settled.  

If you’re looking for a new set of wheels and think you may take out finance again, you might want to learn more about part exchange.  

How do I request a settlement figure? 

If you want to settle your car finance agreement ahead of time, you can request an early settlement figure from your lender.

How are settlement figures calculated? 

To calculate your settlement figure, the lender will add up your remaining monthly instalments between now and the end of your agreement and take away any future interest that you won’t need to pay. Finally, any arrears will be added. You’ll receive your settlement figure in writing to confirm. 

The further you are into your agreement, the lower your settlement figure may be. But be aware that you might have to pay early settlement fees – read your agreement carefully to find out more.  

Your lender will then confirm your final settlement figure – this will usually be valid for 28 days.