So, you’ve got a car, and it is currently on finance. But, you’re either thinking about changing cars or have the means to pay the remaining balance left on your car finance.
This is likely when you will come across the term “settlement”. A car finance settlement is when you pay off your remaining loan balance before the agreed end date. Once you’ve paid this balance—your settlement figure—you’ll own the car outright, and your monthly payments will stop.
Let’s delve into this in more detail:
What Is A Car Finance “Settlement Figure”
How Is This Different From A Settlement?
What Is a Car Finance “Settlement Figure”?
A settlement figure is a letter with your remaining account balance on.
You can get this for free by contacting LM Operations.
How Is This Different From A Settlement?
A car finance settlement is when you choose to end your agreement before the planned end date by paying off the remaining balance.
Once this is paid, the car is yours, and you won’t have any more monthly payments.
The Car Finance Settlement Process
The process for settling your car finance is simple:
- Request Your Settlement Figure: Contact LM Operations and ask for your settlement figure. This is the total amount you need to pay to close your agreement.
- Receive Your Settlement Letter: We’ll send your settlement figure direct to you, which includes your balance and how to pay this off early. To note, if you receive this letter and decide not to go ahead with paying your balance off early, there are no financial obligations to do so. There is also no charge included for requesting this figure.
- Make the Payment: If you decide to go ahead, you’ll need to pay the settlement figure within the time frame that is on the letter, which is usually 28 days. You can pay by cheque or bank transfer
- Complete the Process: Once we receive your payment and process it, your agreement will be closed. We’ll confirm that no more payments are needed.
Benefits Of Settling Early
There are many reasons to settle your car finance early:
- Own Your Car Sooner: If you’re looking forward to owning your car outright, settling can help you achieve this faster.
- Avoid Extra Interest: By paying off your loan early, you can save money by avoiding future interest charges.
- No More Monthly Payments: Settling ends your monthly payments, giving you more control over your finances.
- Upgrade to a New Car: Once you’ve settled, you might decide to upgrade or just change to a different car. It is up to you!
Things To Consider
While settling your car finance has many benefits, there are a few things to think about:
- Affordability: Make sure you can afford the settlement payment without causing financial stress. It’s important to think about both short-term and long-term costs. If you need any additional financial advice, MABS are a free resource that helps you to make financial decisions.
- Future Plans: Think about how settling might affect your other financial goals. If the payment is too high, it might make more sense to continue with your regular payments.
In Conclusion
A car finance settlement is a great option if you want to take full ownership of your car and stop monthly payments. It’s also a smart way to save money on interest. If you’re ready to settle, contact LM Operations, and we’ll help you every step of the way.
Before making your decision, think about your budget and whether you can afford the settlement payment. Settling is only a good idea if it works for your finances now and in the future. If you’re unsure, our team is here to answer any questions and help you make the right choice.