How HP settlement differs from a loan
On hire purchase you hire the car until the final payment, when ownership passes to you. Early settlement ends the agreement and you pay the present value of the remaining rentals.
The rebate is the interest included in those rentals that you no longer pay. A settlement charge of up to 28 or 58 days' interest applies on regulated agreements.
Worked example
With £320 a month and 30 rentals left at 11.9%, the remaining payments total £9,600. The settlement figure is £8,479.09, so the rebate is £1,120.91.
The 58-day charge is £84.79, making the total to settle £8,563.88 and the net saving £1,036.12.
Before you settle
Check whether the agreement includes a balloon or optional final payment, because that changes the settlement calculation.
Ask for a written settlement quote and confirm whether any administration fee is added.
Inputs for the car HP early settlement calculator
Monthly repayment
Your regular monthly rental under the HP agreement.
Repayments left
How many monthly rentals remain.
Interest rate (APR)
The rate on the agreement.
Settlement period
The permitted charge period: 28 days for smaller agreements, 58 days for larger ones.
Is the interest rate fixed?
Choose yes for a fixed-rate agreement.
CALCULATOR QUESTIONS
Car hp loan early settlement calculator questions
Do I own the car before the end?
No. Ownership passes at the end, or when you pay the settlement figure and any option-to-purchase fee.
How is the rebate calculated?
The remaining rentals are discounted at the agreement rate; the difference from their total is the rebate.
Is there an extra fee?
The settlement charge covers up to 28 or 58 days' interest. Check the quote for administration fees.
Does settling early help my credit file?
It shows the agreement settled. Keep the confirmation and check the entry.