25 May 2023
A settlement figure, also known as a settlement amount or a payout figure, refers to the outstanding balance or amount required to pay off a loan in full. In the context of car finance, the settlement figure representsthe total amount that a borrower needs to repay to the lender to settle the car finance agreement before the agreed-upon loan term ends.
Understanding the settlement figure is important for borrowers who want to repay their car finance loan earlier than the agreed-upon term. It allows borrowers to evaluate the feasibility of early repayment, consider potential savings on interest, and plan their finances accordingly. The settlement figure may include the remaining principal balance, any accrued interest, and potentially any early settlement fees or charges.
Suppose a borrower has a car finance agreement with a remaining loan term of two years. However, they decide to sell the vehicle and settle the car finance loan earlier. They contact the lender to request the settlement figure. The lender provides them with the total amount required to fully repay the outstanding balance on the car finance agreement, including any interest that has accrued up to that point. The borrower can then arrange to pay the settlement figure, and upon receipt, the lender considers the loan fully settled.
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