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To pay back over
3.5 years

Zuto is a credit broker, not a lender. Our rates start from 8.9% APR. The rate you are offered will depend on your individual circumstances. Representative Example: Borrowing £9,000 over 60 months with a representative APR of 20.9% the amount payable would be £234 a month, with a total cost of credit of £5,047 and a total amount payable of £14,047.

Zuto Limited. Registered in England under number 05722976. Registered office: Winterton House, Winterton Way, Macclesfield, Cheshire SK11 0LP. Zuto Limited is acting as a broker and not as a lender. Authorised and regulated by the Financial Conduct Authority, registration number 452589. Zuto can introduce you to a limited number of finance providers, based on your credit rating, Zuto won't charge you anything for this service, but do get a fee from the lender which varies based on the product or amount borrowed.

How to pay off car finance early

At some point during a car finance agreement, you might find yourself able to pay off your outstanding balance at an earlier date. If you’re wondering how to pay off car finance early, you need to look at the kind of finance you’ve chosen and decide whether or not you want to keep the vehicle or return it.

There are many different forms of car finance from Hire Purchase (HP) and Personal Contract Plans (PCPs) to personal and fixed loans. Depending on the kind of finance you have, there may be differences in how you can settle your debts early. Always refer back to your original agreement with the terms and conditions included, and if you’re uncertain on any particular points, you should contact your finance company for confirmation.

Repayment plans

Car finance schedules of repayment can be paid off early in a variety of finance types. While this is true, there may be a charge for repaying early, particularly with conditional sales, personal loans and hire purchase agreements. However, always bear in mind that despite this, you’ll still be saving on the interest you won’t pay by shortening the term of your borrowing.

PCP agreements can also be repaid early, but always consider with a finance agreement of this kind that you’ve just been paying back a small fraction of the total finance you’ve borrowed and that your figure for settlement may be much higher than what you could face with other forms of finance.

Online calculators

The first step to repaying your car finance early is to get an idea of how much you’ve got left to pay. Online calculators are a simple way to get this information in a quick and fuss-free fashion. Typically, you will need to know the total amount of your car loan and how much your monthly repayments are. You’ll also need to find out your annual interest rate and how many payments you’ve made by the time you want to end your car finance early. All this information should be listed in your agreement. Once you have all this, simply enter your details into the fields on the online calculator when requested and find out the outstanding amount on your finance agreement.

Remember, there may be additional costs to consider on top of this such as fees for settling your finance agreement early.

Paying off your finance agreement early when you’re keeping the car

Once you’ve worked out your outstanding balance to pay on your car finance, and contacted your lender to see if there is a charge to pay for settling your agreement early, depending on the form of finance agreement you’ve taken out, there may be additional fees to pay.

In an HP agreement, there is an administration fee often referred to as the “option to purchase fee” you will have to pay on top of repaying early to secure the vehicle as yours. This is usually between £100 to £200.

If you’ve taken out a PCP finance deal and wish to repay your finance early and keep the vehicle, you will need to pay what is commonly known as a “balloon” or “GMFV” (Guaranteed Minimum Future Value) payment. This sum is what your dealer or lender expects your vehicle to be worth at the end of your finance deal and you will have agreed this amount at the onset of your finance agreement.

If you decide not to keep the car, you can avoid these additional payments, but make sure the vehicle is returned in good working condition or you’ll face repair bills which will need settling along with your finance.

Other related FAQs

Looking for more related content to this? We’ve picked a selection of related topics that you may find helpful

If you’re struggling to pay your car loan, your first step should be to speak to your lender. They may come to an agreement to help you make your repayments. You could also seek help from a debt advice organisation.

If you want to pay off a car loan with a credit card, look for a card with a good rate on money transfers - and decide whether to use the money to pay the loan off in full or gradually.

There are a number of ways to lower car loan payments, including choosing the right type of loan, going for a long repayment term and searching for the best interest rates.

If you want to pay off your car loan faster, your first step should be to contact your lender to request a settlement figure.