EARLY SETTLEMENT
CALCULATOR
Early Settlement on Car Finance
Paying off your car finance before the end of your agreement is known as an early settlement. This could help reduce your monthly costs, free up your budget, or help you move into a new car sooner.
Your settlement figure is the amount needed to clear the remaining finance. In many cases, this can be lower than the total amount payable because you may receive a reduction in future interest.
Use the calculator below to estimate what your settlement figure could look like.
Outstanding Balance
£0.00Finance is subject to status. Settlement rules apply to agreements regulated by the Consumer Credit Act 1974. Always confirm figures, terms, and ownership details directly with your lender.
Representative Example (PCP):
Borrowing £19,121.23 over 48 months with a representative APR of 11.36%, the annual interest rate of 6.46% (Fixed) and a deposit of £1,266.23, the amount to finance would be £17,855.70, paying £323.72 per month, with a total cost of credit of £6,194.43, an optional final payment of £8,511.57 and a total amount payable of £25,715.36 (incl. £399 option to purchase fee).
This represents an average of the deals that our customers receive on other vehicles. We are a credit broker and a lender. We can introduce you to a limited number of lenders and their finance products. We will provide details of products available, but no advice or recommendation will be made. You must decide whether the finance product is right for you. We do not charge you a fee for our services. Lenders will pay commission to us (either a fixed fee or a fixed percentage of the amount you borrow) for introducing you to them, this may be calculated in reference to a variable factor such as (but not limited to) the vehicle age, your credit score and the amount you are borrowing. Different lenders may pay different commissions for such introductions. Offers available to everyone over the age of 18, subject to credit approval.
What’s an Early Settlement Figure?
Your Early Settlement Figure - or ESF - is the total amount required to fully clear your finance agreement.
It is made up of three main parts:
- Outstanding Balance: the remaining amount on your agreement
- Interest Rebate: a reduction for the interest you will not have to pay
- Settlement Interest: up to 58 days of interest that lenders may be allowed to include
This means you’re not paying all remaining instalments, but a reduced amount based on ending your agreement early.
How Does the Calculation Work?
Lenders use the Actuarial Method to calculate your settlement figure, which adjusts the interest based on how far through your agreement you are. This means you only pay for the time you’ve had the finance, rather than all the remaining interest.
In simple terms, your settlement starts with what you still owe, then reduces as you’re no longer paying future interest, and finally includes up to 58 days of interest that lenders may be allowed to charge.
For example, if your remaining balance is £10,000 and you receive an interest rebate of £800, this reduces your balance to £9,200. If £120 of settlement interest is then added, your final settlement figure would be £9,320.
Work Out Your Equity
Your equity position is the difference between your car’s value and your settlement figure.
Positive Equity
If your car is worth more than your settlement figure, you can use the difference as a deposit or take it as cash.
Negative Equity
If your car is worth less than your settlement figure, you will need to cover the shortfall if you choose to settle or change your car early.
Settling Your Finance Early
The process is straightforward and works like this:
- Request a settlement figure from your lender or dealer
- Check how long the quote is valid - usually 28 days
- Make the payment in full or settle through a dealer
- Receive confirmation once the agreement is closed
What happens next depends on whether you keep the car or change it. If you keep it, you can become the legal owner of the vehicle once the finance is settled.
Frequently Asked Questions
Related Resources
- Car Finance Hub
- Hire Purchase (HP)
- Car Finance Calculator (HP)
- Personal Contract Purchase (PCP)
- Negative Equity Explained