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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 your car loan faster

If you have some money to spare every month, have had a windfall or are aware that your circumstances might change in the near future, you might be wondering how to pay off your car loan faster. Can you do this, and if so, how?

The settlement figure

What is it?

The first step is to contact your lender and ask them for a ‘settlement figure’. This is the amount they require to consider the loan fully repaid. Make sure you also know what your monthly payments are now, and how many of these are left to go, as you can then compare the settlement figure with the amount you’d pay if you continued with the original agreement.

Will it save you money?

It’s only worth paying off your loan if it would save you money. Therefore you need to compare what you would pay over the remainder of the existing agreement with the settlement figure. If the latter is lower, then it may be worth paying off your car finance early.

How are you paying?

A lump sum

The next factor to consider is how you plan to pay off the car loan. If you have a lump sum that will cover the settlement figure, then this is a fairly simple process - assuming, as mentioned above, that doing so will actually save you money.

Another loan

If you are not lucky enough to have a spare lump sum sitting around, then you may need to borrow money from somewhere in order to pay off your car loan faster. This is where refinancing comes in.


If you are going to borrow the money to settle your car loan, then you are effectively refinancing the car. The pertinent question is, why would you take the refinancing route?

Less interest

It may be as straightforward as the fact that you can simply secure a better deal now than when you took out your existing car finance package. If interest rates are lower, then this may well apply.

More time

Beware before signing on the dotted line. You may be able to get a better rate of interest - but if you will be paying back the new loan over a longer time period then it might still cost you more.

Do your sums

Make sure you add up what you will pay in total, both if you stick with your current finance deal and if you switch to a new one. If taking out a new agreement would cost more in the long term, then it’s not worth considering - unless you really need to.

Avoiding debt

If you are struggling to meet your payment obligations every month, then it may be worth looking into your options. Taking out a new loan may enable you to reduce the monthly cost to a level you can afford, and this will help protect your credit rating as opposed to falling into arrears. In this case, you would not be paying off your car loan faster, however – in fact the opposite would apply.

Owning the car

Refinancing a vehicle can be attractive because it allows you to take ownership of the car sooner, if you currently have a Hire Purchase or Personal Contract Plan agreement. If you pay these off faster, you will own the car sooner - but if you take out a new finance deal to fund this, you may end up paying for more rather than less time.

Is it worth paying off your car loan faster?

The answer depends on the circumstances. If you have a lump sum, and the settlement figure is lower than the total due, then yes. If you can get a better interest rate and thus pay back less overall, then it can also be worthwhile.

If neither of these apply, then there may not be much point in paying off your finance agreement sooner than originally planned.

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 want to pay off your car finance early, check the terms of your deal and contact your lender to discuss your options.

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.