Calculators · 05

Car Finance Settlement Calculator

This calculator estimates the early settlement figure on a UK car finance agreement (PCP or HP) using the actuarial method the Consumer Credit (Early Settlement) Regulations 2004 require lenders to use. Enter the amount financed (cash price minus your deposit), the term, the payments and, for PCP, the balloon payment. It assumes payments were made on time; always request an official settlement figure before paying.

Options

Results

No options selected.
Enter your figures and calculate.

Overview

The car finance settlement calculator estimates how much it would cost to pay off a PCP or HP agreement today. Enter the amount you financed (the car's price minus your deposit and any part-exchange), the term, your monthly payment and how many payments you've made. On PCP, add the balloon payment, also called the guaranteed future value or optional final payment, from your agreement. The calculator solves the APR your payments imply, then works out the settlement figure with the actuarial method that the Consumer Credit (Early Settlement) Regulations 2004 require every UK lender to use.

Settling early means the lender must rebate the interest you haven't yet incurred, so the figure is less than simply adding up your remaining payments. The calculator shows that saving explicitly, along with what you'd pay by carrying on to the end of the agreement. It also works out where you stand against the 50% voluntary termination threshold, the separate legal right that lets you hand the car back once half the total amount payable has been paid.

How it works

Enter the agreement

The amount financed, the term in months and your monthly payment. Add the first payment if it was different (admin fees are often collected there) and, for PCP, the balloon payment from your paperwork.

Say how far in you are

The number of monthly payments you've made so far. The calculator solves the APR implied by your payments, so you don't need to find the rate on your agreement.

Compare your exits

You get the estimated settlement figure with the statutory deferment interest included, the interest saved versus continuing, and where your voluntary termination point falls.

Worked example

Settling a £20,000 PCP halfway through

Take a car financed at £20,000 over 48 months at £299 a month with an £8,750 balloon at the end. Those figures imply an APR of 4.9%. Two years in you've paid £7,176, and carrying on to the end would cost another £15,627 including the balloon.

The estimated settlement figure is £14,615, saving about £1,012 of future interest compared with seeing the agreement out. Notice the settlement is still nearly three quarters of what you originally financed: the balloon means your monthly payments have only been covering part of the car, which is why PCP settlement figures feel high. Whether settling makes sense usually depends on what the car itself is worth against that £14,615.

Frequently asked questions

How is a car finance settlement figure calculated?

UK lenders must use the actuarial method set out in the Consumer Credit (Early Settlement) Regulations 2004. Your outstanding balance is valued at the interest rate implied by the agreement, the interest you haven't yet incurred is rebated, and the lender may add a short stretch of deferment interest, broadly 28 days plus one further anticipated payment on agreements over a year. This calculator follows the same method.

Why is my PCP settlement figure so high?

Because the balloon payment (guaranteed future value) is included in full. PCP monthly payments only cover the car's expected depreciation plus interest, so most of the amount financed is still owed even late in the agreement. Settling early means paying that balloon early. The number that matters is how the settlement figure compares with the car's current value: that gap is your equity, or your shortfall.

What's the difference between settling and voluntary termination?

Settling pays the agreement off and the car becomes yours. Voluntary termination is a separate right under section 100 of the Consumer Credit Act for HP and PCP: once you've paid half of the total amount payable you can return the car and owe nothing more, provided it's in reasonable condition and within any mileage terms. If the settlement figure is well above the car's value, VT can be the cheaper exit. This calculator shows both your settlement figure and where your 50% point falls.

Does this work for both PCP and HP?

Yes. For HP, leave the balloon blank if your final payment matches the others, or enter it if your agreement ends with an option-to-purchase fee. For PCP, enter the balloon from your agreement. Personal loans used to buy a car aren't secured on the vehicle, and are covered by the loan and settlement calculators instead.

Can I get equity out of my car before the agreement ends?

If the car is worth more than your settlement figure, the difference is yours: sell or part-exchange, settle the finance, and keep the surplus (the finance company must be paid first, since it owns the car until then). If the car is worth less, that's negative equity, and you'd need to fund the gap to exit early.

Will this match my lender's official figure?

It should be close, since the calculation method is fixed by law and this calculator assumes all payments were made on time. Arrears, payment holidays or fees on the account will move the real number. Your lender must give you an official settlement figure free of charge whenever you ask, and that quote, usually valid for around ten days to four weeks, is the one to pay against.

Related calculators

Actuarial Settlement Calculator

The regulated early-settlement figure required by the (Early Settlement) Regulations 2004, with statutory deferment applied.

Open →

Settlement Calculator by Date

The regulated settlement figure worked out to an exact date, for monthly, weekly, fortnightly or four-weekly agreements.

Open →

Rule of 78 Settlement Calculator

For non-regulated agreements outside the Consumer Credit Act, with an adjustable deferment period.

Open →