Settling pcp early

[minichamp]

So got a car on finance had it a year, My circumstance have changed and I'm only using it once a week, so getting rid.
Dealer has offered circa 19.5k , called finance company today for a settlement and got told it was around 17.5k I owed with a rebate,
Dealer says now is best time to sell,
Question is by clearing finance early and selling to dealer will this have a negative hit to my credit rating?

[anonymous-user]

Likely positive as it shows that you have fulfilled a credit agreement - you aren't terminating it (in the way you would if it was a VT), you are just paying off the balance in full within the term.

Just keep an eye on your credit file online (sign up for checkmyfile or similar) and don't cancel the direct debit until you know the agreement has been recorded as fully settled by the finance provider - this can sometimes be a week or so after part-exchanging/selling the car. They'll then rebate any overpayment if you're owed money if for example a payment came out shortly after selling.

[JagYouAre]

It will have no negative impact on your credit report. I did the same last January for different reasons (needed to not have outstanding motor finance for a mortgage application) and just had a look at my credit report, just shows as settled and closed, all green ticks, nothing untoward. As mentioned it will probably be the opposite, as you’ll have one less credit agreement.

[Limpet]

I've settled 2 PCPs early, and can confirm that as long as your payments are up to date, and you pay the agreed settlement in full, it has no negative impact on your credit file. And neither should it, as you will have fulfilled your obligations under the agreement.

As long as you've kept up repayments and they've been made on time, there will be no adverse effect on your credit history. It will simply appear as a settled agreement in the exact same way it would have if it had gone full term and you'd handed the car back, or paid the GFV.

Just read the settlement letter carefully as depending on when the payment date falls, sometimes the figure will assume the next payment is made. One of mine involved paying the settlement, and then the next payment due which was a week later and couldn't be stopped. It was factored into the settlement calculation and explained in the letter, but if I'd missed that and cancelled the direct debit, technically I would have been in breach of the agreement and could have had issues.

You will receive a letter from the finance company once it's all done to confirm the agreement has been satisfied, and you have no further obligation under it.

Edited by Limpet on Wednesday 15th December 16:08