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Understanding Your Citroën Finance Settlement Figure

When you decide to end your Citroën finance agreement early, whether it's a Personal Contract Purchase (PCP) or Hire Purchase (HP) arrangement, you'll need to obtain a settlement figure. This figure represents the total amount you need to pay to fully own the vehicle and terminate the finance agreement.

Several factors influence the settlement figure, and understanding these can help you anticipate the amount and plan accordingly. Here's a breakdown of what contributes to the calculation:

Components of the Settlement Figure

• Outstanding Balance: This is the core component and reflects the remaining amount you owe on the original loan. It includes the principal amount borrowed, less any repayments you've already made.
• Early Settlement Fee: Finance agreements often include a fee for settling the agreement before the originally agreed term. This compensates the finance company for the loss of interest they would have earned had you continued with the payments. The specifics of this fee should be detailed in your finance agreement's terms and conditions.
• Interest: Some settlement figures may include interest accrued up to the settlement date, even if you're settling before your next scheduled payment.
• Option to Purchase Fee (PCP agreements): In PCP agreements, there's usually a final 'balloon payment' or Guaranteed Minimum Future Value (GMFV) required at the end of the term to own the car. If you settle early on a PCP, you will generally still be required to pay a proportion of this GMFV as it forms part of the financial product.
• Rebates/Refunds (if applicable): Occasionally, you may be entitled to a partial rebate or refund of charges like Payment Protection Insurance (PPI) if it was included in your finance agreement and cancelled early. Any applicable rebates will be deducted from the overall settlement figure.

Obtaining Your Settlement Figure

The most accurate way to determine your Citroën finance settlement figure is to contact the finance company directly. You can usually do this through their website, customer service hotline, or via written request. Be prepared to provide your vehicle registration number and finance agreement details. The finance company is legally obligated to provide you with a settlement figure upon request.

Keep in mind that settlement figures are typically valid for a specific period, usually around 10-14 days. This is because interest accrues daily, and the outstanding balance changes. If you don't settle within the validity period, you'll need to request a new settlement figure.

Negotiating the Settlement Figure

While the finance company has calculated the figure based on your agreement, there's limited room for negotiation. The early settlement fee is often a fixed percentage outlined in your contract. However, it's always worth reviewing your finance agreement carefully to ensure all charges are accurate and justified. If you believe there's an error, contact the finance company to discuss it.

Alternatives to Settlement

Before settling your finance agreement, consider other options:

• Refinancing: Explore refinancing the remaining balance through another lender, potentially securing a lower interest rate.
• Part-Exchange: If you are looking to get a new car, consider part-exchanging your current vehicle, and the dealership may settle the outstanding finance for you.
• Voluntary Termination (HP agreements): If you've already paid at least 50% of the total amount payable under an HP agreement, you may be able to voluntarily terminate the agreement and return the vehicle without further obligation (subject to certain conditions).

Settling your Citroën finance agreement requires careful consideration of the settlement figure and comparison with alternative options. Understanding the factors that contribute to the figure will enable you to make an informed decision that best suits your financial situation.

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