What Is a Car Finance Settlement Figure?

The number that lets you draw a line under car finance

A settlement figure is the total amount needed to repay your car finance early and close the agreement. In plain terms, it is the price of walking away before the term ends. For most UK drivers on Hire Purchase or Personal Contract Purchase, this figure includes what you still owe on the loan, any interest that has accrued up to the settlement date, and fees set out in your contract. Crucially, it does not include future interest you would have paid if you kept the agreement to the end.

Understanding the figure matters because it shapes real decisions - whether to sell your car, part-exchange it, refinance on better terms, or pay off the balance to reduce monthly outgoings. If you have a PCP, remember that the balloon payment sits at the heart of the calculation. Monthly PCP payments largely cover depreciation, so settling early to keep the car means clearing the balloon as well as any remaining balance and fees.

In the UK, lenders must provide a settlement figure on request, usually in writing. The quote is typically valid for 28 days, giving you time to arrange payment or complete a sale. After that, a fresh figure is needed because your balance, interest, or charges may have changed. Some providers offer shorter validity windows, so timing is essential if you are coordinating a private sale or dealer part-exchange.

Think of the settlement as a snapshot of your agreement on a specific day. Read it closely, check for early repayment fees or unpaid instalments that have been added, and compare it with the vehicle’s value. When the numbers stack up, an early exit can be both simple and cost-effective.

Knowing your settlement figure turns guesswork into a plan.

Who benefits from knowing this figure

If you are considering selling a financed car, moving to a new vehicle, or reducing debt, the settlement figure is your essential reference point. Private sellers can use it to clear finance during a sale, often by having the buyer or dealer pay the lender directly. PCP customers weighing up keeping the car should assess the balloon alongside market value to avoid surprises. HP customers aiming for outright ownership can compare the settlement with the cost of continuing payments.

Drivers refinancing to improve rates or reshape terms can use the figure to benchmark savings, while self-employed or business users can plan around tax treatment of interest and fees. If clarity and control over costs are your priorities, start with the settlement quote.

Your practical choices

1. Pay the settlement in full and keep the car.

2. Part-exchange - dealer clears finance, you move to another car.

3. Private sale - buyer pays lender, surplus goes to you.

4. Refinance - replace existing agreement with new credit.

5. Continue payments - wait until term end or optional final payment.

Cost, impact, returns, and risks

Eligibility and what lenders look for

Settlement figures are standard on UK HP and PCP agreements. You can request one at any time, and lenders will typically provide it in writing. The quote usually includes your outstanding balance, interest accrued up to the date shown, any unpaid instalments, and early settlement fees where applicable. PCP customers aiming to own the vehicle must also account for the balloon payment. If you intend to sell or part-exchange, dealers commonly settle finance on your behalf and handle the paperwork, but you remain liable until the lender confirms the balance is cleared.

Early repayment fees vary, often equating to up to one or two months of interest, though some lenders apply interest rebates for the term you will no longer use. Always read your agreement to understand exact costs. For business users, interest and fees may have different tax treatments than for private individuals, so professional advice can be valuable.

Kandoo connects UK customers with a panel of trusted lenders. If you are exploring refinancing or funding a new purchase after settlement, we can help you compare options quickly and responsibly.

From quote to closure - step by step

1. Request your written settlement figure from the lender.

2. Check validity dates, fees, and any unpaid instalments.

3. Compare with market value and your budget.

4. Choose to repay, sell, part-exchange, or refinance.

5. If selling, arrange payment direct to the lender.

6. Obtain written confirmation once the balance clears.

7. Finalise transfer, new finance, or ownership documents.

Weighing it up at a glance

Points to check before you act

Settlement figures are time-sensitive. Most are valid for 28 days, after which you will need a fresh quote that reflects your latest position. If you are selling privately, align the sale date with the validity period to avoid recalculations. Verify whether the figure includes any unpaid instalments, and note that while future interest is removed, early repayment fees may apply.

For PCP agreements, remember the balloon payment sits alongside any fees and remaining balance. Compare your settlement to the car’s current market value rather than the original purchase price. If you use the car for business, consider the tax treatment of interest and charges and seek guidance if unsure. Always insist on written confirmation from your lender once the balance is cleared before handing over keys or V5C.

Alternative routes if settlement is not right now

1. Voluntary termination - subject to terms once you have paid 50%.

2. Payment holiday or restructuring - ask your lender about options.

3. Part-pay the balance - reduce instalments without full settlement.

4. Delay the switch - wait for equity to improve or fees to fall.

5. Consider a different vehicle budget - align payments with affordability.

Frequently asked questions

Q: What exactly is included in a settlement figure? A: It normally covers your outstanding balance, interest accrued to the settlement date, any unpaid instalments, and early settlement fees. PCP customers must also consider the balloon payment to take ownership.

Q: How long is my settlement quote valid? A: In the UK, most figures are valid for around 28 days. Some lenders use shorter windows, such as 10 days. If it expires, request a new quote before proceeding.

Q: Do I pay future interest when settling early? A: No. Future interest is removed, but you may pay an early repayment charge. Some lenders also offer an interest rebate for the time you will not use.

Q: Can I sell a car that is still on finance? A: Yes, but clear the finance first. The buyer or dealer can pay your lender directly. You remain responsible until you receive written confirmation that the balance is settled.

Q: What about tax when I settle? A: Repaying the principal is typically not taxable for private motorists. Interest and fees may have specific treatments, especially for business users. Seek advice if in doubt.

Q: How is PCP different from HP when settling? A: HP settlements focus on clearing remaining payments and fees to gain ownership. PCP adds the balloon payment, which can be a large lump sum if you choose to keep the car.

How Kandoo can help

Kandoo is a UK-based retail finance broker. If you are considering refinancing after settlement or funding your next car, we can introduce you to a panel of lenders so you can compare rates, terms, and monthly costs with confidence. Check your options without obligation and move forward on your terms.

Important information

This article is for general guidance only and does not constitute financial or tax advice. Product features and fees vary by lender and your circumstances. Always read your agreement and seek professional advice where needed.