How do I get a car finance settlement figure?

Ask your lender, in writing or through their app or portal. Under section 94 of the Consumer Credit Act 1974 they must provide one for a regulated agreement, and it is usually valid for a set period, commonly 28 days. It is the only accurate figure: any calculator, this one included, can only estimate it, because the statutory rebate uses an actuarial formula based on your agreement's specific rate and remaining term.

How is an early settlement figure calculated?

It is the outstanding balance less a statutory rebate of interest you have not yet incurred, under the Consumer Credit (Early Settlement) Regulations 2004. The lender may defer the settlement date by 28 days, plus a further 30 on agreements longer than twelve months, when calculating that rebate, which is why the figure is higher than a simple balance calculation. This is the so-called 58-day rule.

What is the 50% rule on car finance?

Under sections 99 and 100 of the Consumer Credit Act 1974, once you have paid half of the total amount payable you can voluntarily terminate the agreement, return the car in reasonable condition and owe nothing further. On PCP, that half is calculated on the deposit plus obligatory instalments and excludes the optional final GMFV payment, so the threshold is reached considerably earlier in the agreement than most drivers expect.

Is Voluntary Termination better than settling?

Usually, if you are in negative equity and past the 50% point. Settling means paying more than the car is worth; VT means handing it back and owing nothing further. If you have positive equity the reverse applies: settle, sell the car and keep the difference. The deciding figure is the car's market value against the settlement figure, which is what this calculator works out.

Does Voluntary Termination affect my credit score?

It is recorded as the agreement ending early. It is not a default and not a repossession, and it does not carry the same weight as either, but some lenders view a VT marker less favourably in future applications. Weigh that against the alternative, which is often a four-figure cash payment to cover negative equity, and for most people the payment is the bigger problem.

What is negative equity on car finance?

It means the settlement figure is higher than the car's market value, so you cannot clear the agreement by selling the car. It is normal in the early and middle stages of a PCP, because depreciation runs ahead of repayment. It resolves on its own late in an agreement as the balance falls faster than the value, which is why waiting is often the cheapest response.

Can I sell a car that still has finance on it?

Not without settling the agreement, because the finance company is the legal owner until the final payment. You can sell privately or to a buying service provided the finance is settled as part of the transaction, which reputable buyers handle routinely. Selling a financed car without disclosing and settling it is a criminal offence, and an HPI check will show the outstanding finance to any competent buyer anyway.

Should I let a dealer roll my negative equity into a new deal?

Be very cautious. It makes the immediate problem disappear while starting the next agreement already underwater, and repeated across two or three cars the carried-over shortfall can exceed the value of the car you are driving. Keeping the car until equity recovers, using Voluntary Termination if you are past the 50% point, or paying the shortfall rather than financing it are all cheaper, if less comfortable.

Car Finance Early Settlement Calculator

Work out whether settling your PCP or HP agreement early leaves you in positive or negative equity against the car's current value, and when Voluntary Termination becomes an option.

Not financial or legal advice. This is an estimate, representative figures, not financial or legal advice. Always get an official settlement figure and confirm your Voluntary Termination position directly with your finance provider. If you're struggling with car finance repayments, free, independent help is available from MoneyHelper (moneyhelper.org.uk) and StepChange (stepchange.org).

Enter your agreement details

Add your balance (or the figures to estimate it), a settlement figure and the car's current value to see your equity position.

How this is worked out

The outstanding balance, when not entered directly, is estimated as your remaining monthly payments plus the balloon/GMFV for a PCP. The settlement figure, when not entered directly, applies your chosen rebate percentage to that balance as a simple approximation of the interest rebate lenders must apply, real settlement figures use a more precise actuarial calculation set out in the Consumer Credit (Early Settlement) Regulations 2004. Equity is simply the car's current value minus the settlement figure. The Voluntary Termination threshold is 50% of the agreement's total amount payable (deposit plus every contracted instalment, excluding any optional final PCP payment); once what you've paid reaches that point, sections 99 to 100 of the Consumer Credit Act 1974 give you the right to hand the car back.

Your right to settle early, and what it costs

Section 94 of the Consumer Credit Act 1974 gives you the right to settle a regulated PCP or HP agreement in full at any time. You ask the lender for a settlement figure, they must provide it, and paying it ends the agreement and transfers ownership.

The settlement figure is not the sum of your remaining payments. You receive a statutory rebate of interest you have not yet incurred, calculated under the Consumer Credit (Early Settlement) Regulations 2004. That is the good news.

The less good news is that the lender is permitted to defer the settlement date when calculating the rebate: by 28 days, plus a further 30 days on agreements running longer than twelve months. That is the origin of the nickname, the 58-day rule, and it means the figure you are quoted includes a little more interest than a pure balance calculation would suggest.

This calculator estimates the settlement figure by applying an editable rebate percentage. The real regulations use an actuarial formula that only your lender can compute exactly, so always get the official figure in writing before acting on any of this.

Equity: the number that decides everything

Equity is the car's current market value minus the settlement figure. It is the single number that determines which option is right, and it is worth establishing before you talk to a dealer.

Positive equity means the car is worth more than you owe. You can settle and sell privately, keeping the difference, or part-exchange and roll the equity into the next deposit. A private sale usually realises more than a part-exchange, though it takes longer and you must settle the finance as part of the transaction, since you cannot sell a car you do not legally own.

Negative equity means the car is worth less than you owe, so settling requires finding extra money from somewhere. It is entirely normal early in a PCP agreement, because the car depreciates faster than the balance reduces. It is not a sign that anything has gone wrong.

Get the valuation from more than one source. A dealer's part-exchange offer, an online buying service and a private-sale guide price can differ by a thousand pounds or more on the same car, and the spread between them is frequently larger than the equity itself.

Voluntary Termination, the 50% rule

Sections 99 and 100 of the Consumer Credit Act 1974 give you a second right, and it is the one lenders mention least. Once you have paid half of the total amount payable, you can end the agreement by returning the car and owe nothing further.

What counts towards that half matters enormously. It is the deposit plus the obligatory monthly instalments. On PCP it specifically excludes the optional final GMFV payment, which means the halfway point arrives far earlier in the agreement than most people assume, often around two-thirds of the way through a typical four-year deal rather than at the two-year mark.

If you have not reached half yet, you can still voluntarily terminate by paying the shortfall up to that halfway point. Sometimes that shortfall is smaller than the negative equity, which makes VT the cheaper exit even when it feels like paying for nothing.

VT is a statutory right, not a concession. A lender cannot refuse it, though some make it administratively awkward. Put the request in writing, reference section 99, and keep a record.

When Voluntary Termination beats settling

The rule of thumb is simple: if you are in negative equity and past the 50% point, VT is almost always better. Settling means finding the shortfall in cash; VT means handing the keys back and walking away.

In the worked example below, settling would cost £1,180 more than the car is worth, while VT is available and costs nothing further. The calculator's verdict reflects exactly that comparison.

The car must be in reasonable condition for its age and mileage when returned, and any arrears are still owed on top. There is no excess-mileage charge on VT in the way there is on a PCP handback at term end, though a lender may argue the car has had more than fair wear and tear, so photograph its condition on the day you return it.

VT is recorded on your credit file as the agreement ending early. It is not a default and it is not the same as repossession, but some lenders view a VT on file less favourably when assessing future applications. That is worth weighing against a four-figure negative-equity payment, and for most people the payment is the larger problem.

The trap: rolling negative equity into the next car

If you are in negative equity and ask a dealer about changing cars, the likely offer is to settle your existing finance and add the shortfall to the new agreement. The immediate problem vanishes and the monthly payment barely moves, which is exactly what makes it attractive.

What has actually happened is that you now owe more than the new car is worth from day one, so the next agreement starts deeper in negative equity than the last one did. Repeat it twice and the carried-over shortfall can exceed the value of the car you are driving.

The alternatives are less comfortable and considerably cheaper: keep the car until the equity position recovers, which it does as the balance falls faster than the value late in an agreement; use VT if you are past the 50% point; or pay the negative equity off rather than financing it.

Before any part-exchange on finance, get the settlement figure from the lender directly rather than relying on a dealer's summary, and check what the dealer is actually allowing for your car as distinct from what they are discounting the new one by. Those two numbers are frequently presented as one.

Worked example: a PCP in negative equity, 18 months to run

£300 a month with 18 payments left, a £9,000 GMFV, and a car now worth £12,500. These are the exact figures this calculator returns.

Finance type	PCP
Monthly payment	£300.00
Months remaining	18
GMFV	£9,000.00
Balance remaining	£14,400.00
Early settlement rebate applied	5%
Estimated settlement figure	£13,680.00
Car's current value	£12,500.00
Equity	-£1,180.00
Total amount payable (excl. GMFV)	£16,900.00
Paid so far	£11,500.00
Voluntary Termination threshold (50%)	£8,450.00
Verdict	Voluntary Termination

Settling would mean finding £1,180 more than the car is worth. The 50% threshold is £8,450 and £11,500 has been paid, so Voluntary Termination is available and costs nothing further. Note how much earlier that threshold arrived than expected: it is measured against £16,900 of deposit and instalments, not against the £25,900 the agreement would total if the GMFV were included.

Frequently asked questions

How do I get a car finance settlement figure?: Ask your lender, in writing or through their app or portal. Under section 94 of the Consumer Credit Act 1974 they must provide one for a regulated agreement, and it is usually valid for a set period, commonly 28 days. It is the only accurate figure: any calculator, this one included, can only estimate it, because the statutory rebate uses an actuarial formula based on your agreement's specific rate and remaining term.
How is an early settlement figure calculated?: It is the outstanding balance less a statutory rebate of interest you have not yet incurred, under the Consumer Credit (Early Settlement) Regulations 2004. The lender may defer the settlement date by 28 days, plus a further 30 on agreements longer than twelve months, when calculating that rebate, which is why the figure is higher than a simple balance calculation. This is the so-called 58-day rule.
What is the 50% rule on car finance?: Under sections 99 and 100 of the Consumer Credit Act 1974, once you have paid half of the total amount payable you can voluntarily terminate the agreement, return the car in reasonable condition and owe nothing further. On PCP, that half is calculated on the deposit plus obligatory instalments and excludes the optional final GMFV payment, so the threshold is reached considerably earlier in the agreement than most drivers expect.
Is Voluntary Termination better than settling?: Usually, if you are in negative equity and past the 50% point. Settling means paying more than the car is worth; VT means handing it back and owing nothing further. If you have positive equity the reverse applies: settle, sell the car and keep the difference. The deciding figure is the car's market value against the settlement figure, which is what this calculator works out.
Does Voluntary Termination affect my credit score?: It is recorded as the agreement ending early. It is not a default and not a repossession, and it does not carry the same weight as either, but some lenders view a VT marker less favourably in future applications. Weigh that against the alternative, which is often a four-figure cash payment to cover negative equity, and for most people the payment is the bigger problem.
What is negative equity on car finance?: It means the settlement figure is higher than the car's market value, so you cannot clear the agreement by selling the car. It is normal in the early and middle stages of a PCP, because depreciation runs ahead of repayment. It resolves on its own late in an agreement as the balance falls faster than the value, which is why waiting is often the cheapest response.
Can I sell a car that still has finance on it?: Not without settling the agreement, because the finance company is the legal owner until the final payment. You can sell privately or to a buying service provided the finance is settled as part of the transaction, which reputable buyers handle routinely. Selling a financed car without disclosing and settling it is a criminal offence, and an HPI check will show the outstanding finance to any competent buyer anyway.
Should I let a dealer roll my negative equity into a new deal?: Be very cautious. It makes the immediate problem disappear while starting the next agreement already underwater, and repeated across two or three cars the carried-over shortfall can exceed the value of the car you are driving. Keeping the car until equity recovers, using Voluntary Termination if you are past the 50% point, or paying the shortfall rather than financing it are all cheaper, if less comfortable.

Also known as: pcp early settlement calculator · pcp settlement calculator · car finance settlement calculator · paying off car finance early calculator · early settlement figure calculator · voluntary termination car calculator · car equity calculator · settlement figure calculator