How can I settle my car finance early?

How can I settle my car finance early?

To pay off your finance early, you’ll need to contact your provider to ask them for a settlement figure. This is the amount you’ll need to pay to clear your finance and will include any early repayment fees.

How does a car settlement figure work?

A settlement figure, when talking about car finance, is the amount of money you still owe on your loan or finance agreement, including interest. It might be important to know this figure if you need to sell or replace a car before your car finance agreement ends.

What is an early settlement fee?

An early settlement figure is the amount still owed, plus interest and charges if you want to pay off your car finance early. For regulated agreements, this is normally an exit fee equal to around just 58 days interest charge.

Is it worth paying off a car loan early?

Paying off your car loan early can be a great idea. For one thing, you’ll save on interest. You also won’t have to worry about car payments after it’s paid off, which can be appealing in uncertain times. If you want to be debt-free, paying off your car is a major step in that direction.

How do I find out my settlement figure on my car?

Your lender can provide you with your settlement figure over the phone, via email (which can take 2-3 days) or by post (which could take 7 or so days). Your settlement figure is valid for 14 days from the date you request it.

Does settlement amount include balloon payment?

According to the Motor Finance Corporation, even though the balloon payment is used to reduce your monthly instalments, it remains part of your finance agreement. This means that, when you ask for a settlement amount on your vehicle, the balloon amount is included in the calculation of the settlement amount.

Is taking a settlement bad for your credit?

Yes, settling a debt instead of paying the full amount can affect your credit scores. Settling an account instead of paying it in full is considered negative because the creditor agreed to take a loss in accepting less than what it was owed.

Can I pay my loan early?

It is possible to pay off your personal loan early, but you may not want to. The prepayment penalty might be calculated as a percentage of your loan balance, or as an amount that reflects how much the lender would lose in interest if you repay the balance before the end of the loan term.