Car Finance Early Settlement Calculator
Estimate your HP early settlement figure and statutory interest rebate
Last updated: June 2026
Car Finance Early Settlement Calculator
Estimate the early settlement figure to clear a Hire Purchase (HP) or personal loan car finance agreement, including the statutory rebate of future interest under the Consumer Credit (Early Settlement) Regulations 2004.
What this calculator does
If you want to clear your car finance ahead of schedule, you have a legal right to do so under section 94 of the Consumer Credit Act 1974. When you settle early, you should not pay all of the future interest you originally agreed to — you are entitled to a statutory rebate of part of that interest under the Consumer Credit (Early Settlement) Regulations 2004. This car finance early settlement calculator estimates the figure you would need to pay today to own your car outright and walk away from the agreement.
It is built for UK drivers on Hire Purchase (HP) deals and personal loan car finance who are part-way through a fixed-term agreement and are wondering "how much to settle my car finance early?". Enter the amount you originally borrowed, your monthly payment, the original term and how many payments you have already made. The tool then works out your remaining balance, deducts the interest rebate you are owed, and adds the limited amount of deferment interest your lender is allowed to keep. The result is an indicative settlement figure you can sanity-check against the official figure your lender must provide on request.
How it works
The calculation follows the structure set out in the 2004 Regulations:
- Remaining balance = monthly payment × number of payments left.
- Total interest (charges) = (monthly payment × original term) − amount borrowed.
- Statutory rebate (Rule of 78) = total interest × [n × (n+1)] ÷ [N × (N+1)], where n is the number of payments remaining and N is the total number of payments. This front-loads interest so the rebate is larger earlier in the term.
- Deferment: under Regulation 6, a lender can keep a little extra interest. In practice this is up to one month for shorter agreements, or up to two months where the term is more than 12 months. We apply this by reducing the rebate for the deferment months.
- Settlement figure = remaining balance − (rebate after deferment).
The Rule of 78 is the long-standing method used for these rebates. Some lenders use the equivalent actuarial method, so your exact figure may differ by a few pounds.
Worked example
Suppose you borrowed £10,000 over a 48-month HP agreement with monthly payments of £250, and you have made 24 payments:
- Total payable = £250 × 48 = £12,000, so total interest = £12,000 − £10,000 = £2,000.
- Payments remaining (n) = 48 − 24 = 24; remaining balance = £250 × 24 = £6,000.
- Full Rule-of-78 rebate = £2,000 × (24×25) ÷ (48×49) = £2,000 × 600 ÷ 2,352 = £510.20.
- The term is over 12 months, so up to 2 months deferment applies. Rebate after deferment = £2,000 × (22×23) ÷ (48×49) = £430.27 (deferment interest kept = £79.93).
- Settlement figure = £6,000 − £430.27 = £5,569.73.
So instead of paying the full £6,000 of remaining instalments, you settle for roughly £5,569.73 — saving £430.27 in future interest.
Frequently asked questions
How do I get my exact settlement figure?
Ask your finance provider for a "settlement figure" in writing or through your online account. By law they must provide it, and it is normally valid for at least 28 days. Use this calculator to check the figure looks reasonable, but always pay the official figure your lender quotes.
Why is the settlement figure more than my remaining balance minus all future interest?
Lenders are allowed to keep a small amount of interest as a deferment charge — up to one month for shorter agreements, or up to two months where your term is more than 12 months. That is why the rebate does not cancel every penny of future interest.
Does this work for PCP agreements?
PCP early settlement uses the same rebate rules, but the figure also depends on the large final balloon payment (the optional final payment). This tool is best suited to HP and personal-loan car finance. For PCP deal structure, see our PCP calculator.
Can I settle only part of my car finance early?
Yes. You can make a partial early settlement, which reduces your balance and earns a proportionate interest rebate. This calculator estimates a full settlement, but partial overpayments follow the same statutory rebate principles.
Source: Rebate and deferment rules are set by the Consumer Credit (Early Settlement) Regulations 2004 and section 94 of the Consumer Credit Act 1974. For guidance on settling credit early, see the FCA. Figures are estimates for guidance only.