PCP Early Settlement: How It Works

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Life changes, and sometimes you may want to end your PCP agreement earlier than planned. The good news is that you can usually settle a PCP early, but it is important to understand how settlement figures work and whether it is financially sensible.

Can You Settle a PCP Early?

Yes. You can request an early settlement figure from your finance company at any time. This is the amount you would need to pay to end the agreement and take ownership of the car (or clear the finance if you are selling or part-exchanging it).

What Is a Settlement Figure?

Your settlement figure typically includes:

  • The outstanding finance balance
  • Any remaining interest, adjusted for early repayment
  • Possible fees or charges specified in your agreement

It may be higher or lower than the current market value of the car, depending on where you are in the term and how the car has depreciated.

Voluntary Termination vs Early Settlement

In the UK, you may also have the right to voluntarily terminate a PCP agreement once you have repaid 50% of the total amount payable (including interest and fees). This is different from early settlement and has its own rules and implications.

It is important to read your finance agreement and, if necessary, seek independent advice before using voluntary termination.

Equity and Negative Equity

When considering early settlement, compare:

  • The settlement figure from your finance company
  • The current market value of your car (trade-in or private sale)

If the car is worth more than the settlement figure, you have positive equity. If it is worth less, you are in negative equity and may need to pay extra to clear the finance.

Using a PCP Calculator to Plan

While a calculator cannot give you an official settlement figure, it can help you understand how much you have paid so far, how much interest you are likely to pay over the full term, and how different terms and deposits affect your position.

You can use the PCP Finance Calculator to explore different scenarios before requesting a formal settlement figure from your lender.

PCP Early Settlement FAQ

Will I save money by settling early?

You may save on future interest, but it depends on how your agreement is structured and whether any early repayment charges apply. Comparing the settlement figure with the remaining scheduled payments can help you decide.

Can I sell the car and use the money to settle?

In many cases, yes. You can sell or part-exchange the car, but the finance must be cleared as part of the process. Dealers are used to handling this, and private buyers will usually want proof that the finance has been settled.

Does early settlement affect my credit score?

Settling a PCP early is not usually negative for your credit score, as long as you have made payments on time. In some cases, it can be seen as positive behaviour, but the impact is generally small.