How is settlement amount calculated on a car?
When you want to end a PCP car finance agreement early, you have to pay a settlement figure. The settlement figure will include any fees that have yet to be paid, like the rest of the interest payments, and the remainder of your monthly payments plus some repayment charges.
How does a settlement figure work on car finance?
What is a settlement figure? Simply put, it's the amount of money you have to pay back to the finance company to completely pay off your agreement. An early settlement figure is the amount outstanding, minus a rebate of interest and charges if you want to pay off your car finance early.
How do you calculate settlement amount?
The settlement amount is calculated by adding back the accrued interest on the clean price and then multiplying by the face value.
How to calculate early settlement of car loan?
Penalties. Most lenders follow the industry standard, which tabulates the final penalty sum by adding up 1% of the initial loan amount, to the 20% of the remaining interest.