If you are selling, part exchanging or refinancing a car on PCP or HP, the number that matters is not your next monthly payment. It is the settlement figure.
That figure tells you what your lender needs to close the agreement early. Get it wrong and a tidy sale can turn into a scramble for extra cash, a delayed handover or a dealer offer that suddenly makes less sense.
Here is what a UK car finance settlement figure usually includes, how long it is valid for, and the checks worth making before you agree anything with a buyer or dealer.
What is a car finance settlement figure?
A settlement figure is the amount your lender says you must pay to end a regulated finance agreement early on a specific date. In practice, it is the total needed to clear the lender’s interest in the car before the scheduled end of the agreement.
If your car is on hire purchase, PCP or conditional sale, you normally need a settlement figure before you can:
- sell the car
- part exchange it
- refinance onto a different agreement
- pay the deal off early and keep the car
Citizens Advice says borrowers covered by the Consumer Credit Act can ask the lender for an early settlement figure, and that paying off a credit agreement early reduces the total amount paid. That matters because the figure is not just a rough estimate. It is the number that lets the lender close the agreement properly.
Why the figure is not just your remaining payments added up
A lot of drivers assume the maths is simple: count the payments left, add them together and that is the balance. It rarely works like that.
A proper settlement figure can include:
- outstanding capital still to be repaid
- interest accrued up to the settlement date
- any unpaid instalments or arrears
- any option to purchase fee, if your agreement has one
- on PCP, the optional final payment if you want to own the car outright
- any allowed early settlement charge or compensation under the rules
At the same time, early settlement should also remove some of the future interest you would have paid if the agreement had run to term. That is why the figure can be lower than the total of every payment left on the agreement, but still higher than many drivers expect.
Does a PCP settlement figure include the balloon payment?
Usually yes, if you are settling the agreement to keep or sell the car.
This is one of the biggest catches with PCP. Monthly payments on PCP cover only part of the car’s value, so the large optional final payment is still sitting there in the background. If you ask for a settlement figure because you want the finance cleared, the lender will usually include that final payment in the amount needed.
That is why a PCP can look affordable month to month but still produce a chunky settlement figure halfway through the deal.
If you are near the end of a PCP and a dealer offers to part exchange the car, always compare three numbers before saying yes:
- the settlement figure
- the dealer’s valuation
- any equity left after the finance is cleared
If the valuation is below the settlement figure, you are in negative equity and the shortfall still has to be covered somehow.
How long is a settlement figure valid for?
Not forever. A settlement figure is date-sensitive.
Lenders usually give it with an expiry date because interest continues to accrue and your account can change if another monthly payment is taken in the meantime. Many lenders quote figures that are valid for around 10 to 28 days, although the exact window varies.
Citizens Advice notes that once you ask for an early settlement figure, you then have 28 days from when the lender receives your request to pay it in full if you want to use that figure. If your sale or part exchange drifts past the valid date, ask for a fresh figure before you commit.
How to get a settlement figure from your lender
In most cases it is straightforward. You can usually request one through:
- your online finance account or app
- the lender’s customer service team
- secure message or live chat
- a formal written request
When you ask, make sure you are clear about what you want. A rough balance, a settlement quote and a final same-day payoff amount are not always identical.
Ask for:
- the exact settlement figure
- the date it is calculated to
- whether any further daily interest applies after that date
- whether missed payments, fees or arrears are included
- whether the figure includes the PCP final payment
Save the confirmation email or letter. If a dealer says they will settle the finance for you as part of a sale or part exchange, keep your own copy rather than relying on a verbal number passed across a desk.
What the law says about early settlement
The key UK protection is that regulated borrowers have a right to settle some or all of a credit agreement early. The Specialist Automotive Finance guidance summarising the Consumer Credit Act position says customers can settle at any time and should receive a reduction in the total cost of credit, including interest, for the period they will no longer use.
That does not mean early settlement is always free. The same guidance says lenders can sometimes charge compensation on larger early repayments where the borrowing rate is fixed, but that compensation is capped. In broad terms, it cannot exceed 1% of the amount repaid early, or 0.5% if less than a year remains.
For most everyday car finance agreements, that means you should expect a rebate of future interest, but you should still read the breakdown in case a permitted charge is included.
When a settlement figure matters most
Selling the car privately
If the finance is still outstanding, you need to clear it before ownership can pass cleanly. Some buyers will walk away the moment they hear the car is on finance. Others will proceed only if the settlement is handled safely, often with the lender involved directly.
Part exchange
Dealers do this every day, but you still need to check the numbers yourself. A part exchange can hide negative equity because the shortfall gets rolled into the next agreement. That can make the next monthly payment look acceptable while leaving you more exposed than before.
Refinancing
If another lender is offering a better rate, the old agreement still has to be settled first. A realistic settlement figure tells you whether switching actually saves money after all charges are accounted for.
Ending a deal because your circumstances changed
If your budget is tighter than when you signed, a settlement figure shows the clean payoff route. It is not the same as voluntary termination, and the cheaper option depends on where you are in the agreement. Anyone close to the 50% voluntary termination point should compare both routes carefully.
The mistakes that catch drivers out
Assuming a dealer valuation equals your equity
It does not. Equity is whatever is left after the lender is paid, not before.
Using an out-of-date figure
A week or two can change the amount, especially if a payment date lands in the middle.
Forgetting arrears or late fees
If you are behind, the settlement figure may be higher than expected.
Overlooking the PCP final payment
This is the classic shock number. The monthly payments felt manageable, but the payoff figure still includes the balloon.
Confusing settlement with cancellation rights
The 14-day withdrawal right after signing a finance agreement is not the same as settling a live agreement months later.
A quick checklist before you sell, swap or refinance
Before you move the car on, check these points:
- Get a fresh settlement figure in writing
- Confirm the expiry date
- Check whether the PCP final payment is included
- Ask if there are any arrears, fees or daily interest still to add
- Compare the figure with the car’s realistic market value, not just an optimistic advert price
- Work out whether you have positive equity, no equity or negative equity
- If a dealer is settling the finance, confirm how and when that payment will be made
- Do not hand over the car or V5C until you understand exactly how the finance is being cleared
The bottom line
A car finance settlement figure is the number that turns a vague plan into a real decision. Whether you are selling, part exchanging, refinancing or simply trying to get out cleanly, it tells you what the agreement will actually cost to close today, not what you hoped it might cost.
Ask for it in writing, check the validity date, and make sure you understand whether the final PCP payment, arrears and any permitted charges are included. That small bit of homework is often the difference between using your equity well and accidentally rolling a problem into your next deal.
