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What is a settlement figure? Paying off PCP car finance early

You’ll need to pay your car finance settlement figure in order to end your contract ahead of schedule

Car finance

If you have a car finance arrangement, the settlement figure will be the amount that you still owe.

As you’ll be paying off your car finance through monthly bills, you’ll always owe some money on your finance until you reach the end of your contract.

If you choose to end your car finance contract early, the settlement figure is what you’ll need to pay.

How does a settlement figure work on car finance?

The settlement figure is the amount you owe on your car finance, but might also include extra charges for things like admin as well as early settlement fees.

This settlement fee is usually valid for 28 days, and any extra payments you make in the meantime will affect this figure.

Make sure you’ve got the most up-to-date amount from your finance company before going ahead.

Does a settlement figure include final payment?

If you’re currently in a Personal Contract Purchase (PCP) car finance arrangement, your settlement figure will usually include your final balloon payment.

This is the payment you’d usually make at the end of your contract to take ownership of the car.

If you are ending the contract early by paying the settlement fee, you will need to pay the final balloon payment – that’s something to consider before taking the plunge.

Why do you need a settlement figure in car finance?

Your settlement figure is the amount you’d need to pay to end your finance agreement early, so that’s the main reason why it’s so necessary.

Circumstances change and sometimes we can’t commit to a car for the full period, so the settlement figure allows finance contracts to be ended ahead of time.

This is useful if you need a different car and want to sell it and swap, or just get rid of the car altogether.

Is it worth paying off car finance early?

Paying off your car finance early is worth it if you really don’t need your car anymore or it’s no longer suitable, as it gives you a way out of your contract.

Things such as early repayment fees, negative equity, and not wanting to keep your car can be the decider of whether or not it's worth it to pay off your finance early.

This is especially true if you are on a PCP car finance contract and don’t want to keep your car, as you'll still have to pay the final balloon payment.

You might find that voluntary termination is more suitable than a settlement figure in some cases.

How do I request a settlement figure?

It’s easy to get your settlement figure – just get in touch with your lender. It’ll ask you some details and will likely want to know if you’re planning on ending your contract early.

Bear in mind that any payments you make from getting your figure to accepting it will change the amount you owe, so keep an eye on your payment dates.

Should I pay off my car finance early?

If you don’t want your car and are planning to swap it for something new, then you may want to pay off your car finance early.

If you want to keep your car but want to get those payments finished sooner, work out whether you’d be saving more in the long run by sticking to your payment plan.

Things like early repayment fees can push your settlement fee up, and sometimes it can work out more expensive that just paying for the finance.

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