Settlement figure


The term ‘settlement figure’ refers to the amount of money you will have to pay to clear a loan in full. This is often used when you want to finish a finance agreement early. It can also be useful if you need to sell your vehicle or find a replacement, before the agreement has been completed.


How is the settlement figure calculated?

The settlement figure will collect together three things. First, the total amount left to pay on the car, so the total cost of the vehicle is owed. You will not be charged any interest on the months that you haven’t paid yet, as this interest accrues over time and so will not be applicable if you are cancelling the finance package early. The third thing will be any charges or penalties that you will incur for cancelling the finance package early. This is to help the finance provide compensate themselves for the interest lost by cancelling the agreement early.


How can I request the settlement figure?

If you want to find out how much it will cost to cancel the finance package early, you will need to contact the car finance provider and ask for the settlement figure. They may ask you why you want to settle early, and may even provide other options other than cancelling early. But, if they are an Financial Conduct Authority approved provider, they will always provide you with the current settlement figure if requested.


What if I cannot afford to pay the settlement figure?

If you cannot afford to pay the early settlement figure, than you may not be able to end the finance package early. The finance provider does not want to settle early, as they make their money from the interest charged across the full length of the agreement. If you cannot pay the settlement figure, there may be other ways to end the agreement early, however you may have to return the vehicle to the lender.


Can I finance the payment of the settlement figure?

While you may be able to take out some sort of personal loan to pay off a settlement figure, you won’t be able to finance it directly. What you may wish to do instead is to refinance the current finance agreement on a new finance deal. This means you will be able to pay an equivalent to the settlement figure, and start a whole new finance agreement with fresh terms. However, you will still be paying off a finance agreement, so will not be finishing the finance agreement early, as you would if you paid off the settlement figure outright.


Can I pay off a portion of the settlement figure?

If you come into some money and want to pay off a chunk of the amount owed early, you can contact the finance provider and make the request. You can then ask to either reduce the length of the agreement to adjust for the amount you have paid off, or lower the monthly payments. In this method, you may not have to pay as large a penalty as you would for paying off the whole package early, but you will still have to pay interest for the remaining amount owed on the agreement.

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