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Car finance ›
Can you make additional payments on car finance?
Updated: Tuesday, 26 September 2023
If you ever find yourself with some extra money, you might be considering paying off part of your car finance balance. Some lenders allow you to make additional or early payments on your car finance, which may help you save in the long run.
This might also be something to consider when taking out a new finance agreement, if you think you might be able to make extra payments in the future.
We’ve looked at the ins and outs of making additional payments on your car finance and what to consider before you take the leap.
If you’re a Moneybarn customer and would like to make an extra payment on your car finance, please contact us.
The benefits of making additional payments on your car finance
There are a few benefits of making some additional payments on your car finance:
Pay less in the long term
One advantage of paying off your financial agreement early is that you won’t be paying as much interest in the long term.
By making additional payments, you could reduce your total finance balance and bring your final payment date forward. If this is something you’d like to consider, then you should contact your lender to discuss your options.
Shorten your car finance term
Paying extra on your monthly repayments allows you to pay off your finance faster. Doing this will bring the final payment date forward, or in other words, means there is less time until you’ve fully repaid your finance agreement.
Depending on the type of finance you have, paying your agreement off early may make you the legal owner of your vehicle, giving you the freedom to modify or sell the car as you wish. This is true for Conditional Sale (CS), Hire Purchase (HP), and Personal Contract Purchase (PCP).
What to consider before making additional payments
There are some things you should consider before deciding to make additional payments:
Does your car finance lender allow additional payments?
While some lenders don’t allow early payments, many do – sometimes for a small charge. So, always be aware of any additional fees associated with making extra payments on your car finance. Your lender will be able to discuss your options with you, so if you are unsure, you should contact them.
If you have car finance with Moneybarn, and want to make additional payments, you will need to contact us to do so. Our team can talk you through how it works.
Will making additional car payments affect your finances?
You might have come into some extra money because of something like a bonus or inheritance, and you might want to make additional car payments with this money. However, before changing your car finance payments, you should always check your budget before agreeing to make extra car finance payments. This will show you whether you can afford to make the extra payments, or whether you should hold onto the money and continue to pay off your car finance as usual.
Will paying early affect your credit score?
You should try to pay off your car finance on time and in full each month, as over time, regularly making these payments can improve your credit score. Once your finance is fully paid off it may see an increase to your credit score.
Settling part or all your car finance early shouldn’t negatively affect your credit score. However, if you decide to make additional payments on your car finance, and you miss another payment such as a credit card bill, this will likely affect your credit score.
If you’re looking to find out a bit more about your credit score, discover our other blogs:
How to pay off your car finance sooner
If you are ready to pay off your car finance sooner, we’ve listed some helpful tips on how you can settle your loan early.
Make higher payments each month
If your car finance company allows you to make increased monthly payments, you’ll pay off your finance agreement sooner than the agreed duration. This option can also be easier or more sustainable for some than simply paying off a lump sum at once.
Round up your payments
You might have considered rounding up your monthly repayments.
Rounding up to the nearest £50 may not seem like an awful lot. But it might save you a lot of interest in the long run. Interest is applied for the duration of your loan, and if you can shorten this then you can reduce the amount of interest you need to pay.
Make a larger payment
This may not be possible on a regular basis, but you might have the cash to spare due to a life event or a bonus. You could use this to make a larger one-off payment to shorten your car finance term, if you are able to do so.
Is there a limit to my additional payments?
This depends on your lender and the terms and conditions of your finance agreement. Some lenders may limit the number of extra payments you can make, or not allow them at all. There may also be admin or other charges that you would need to pay. It is always important to check with your lender before you make additional payments.
You can make these payments at any point during the loan term. This brings your final payment date forward, depending on how much additional payment you put forward.
If you ever find yourself with some extra money, you might be considering paying off part of your car finance balance. Some lenders allow you to make additional or early payments on your car finance, which may help you save in the long run.
This might also be something to consider when taking out a new finance agreement, if you think you might be able to make extra payments in the future.
We’ve looked at the ins and outs of making additional payments on your car finance and what to consider before you take the leap.
If you’re a Moneybarn customer and would like to make an extra payment on your car finance, please contact us.
The benefits of making additional payments on your car finance
There are a few benefits of making some additional payments on your car finance:
Pay less in the long term
One advantage of paying off your financial agreement early is that you won’t be paying as much interest in the long term.
By making additional payments, you could reduce your total finance balance and bring your final payment date forward. If this is something you’d like to consider, then you should contact your lender to discuss your options.
Shorten your car finance term
Paying extra on your monthly repayments allows you to pay off your finance faster. Doing this will bring the final payment date forward, or in other words, means there is less time until you’ve fully repaid your finance agreement.
Depending on the type of finance you have, paying your agreement off early may make you the legal owner of your vehicle, giving you the freedom to modify or sell the car as you wish. This is true for Conditional Sale (CS), Hire Purchase (HP), and Personal Contract Purchase (PCP).
What to consider before making additional payments
There are some things you should consider before deciding to make additional payments:
Does your car finance lender allow additional payments?
While some lenders don’t allow early payments, many do – sometimes for a small charge. So, always be aware of any additional fees associated with making extra payments on your car finance. Your lender will be able to discuss your options with you, so if you are unsure, you should contact them.
If you have car finance with Moneybarn, and want to make additional payments, you will need to contact us to do so. Our team can talk you through how it works.
Will making additional car payments affect your finances?
You might have come into some extra money because of something like a bonus or inheritance, and you might want to make additional car payments with this money. However, before changing your car finance payments, you should always check your budget before agreeing to make extra car finance payments. This will show you whether you can afford to make the extra payments, or whether you should hold onto the money and continue to pay off your car finance as usual.
Will paying early affect your credit score?
You should try to pay off your car finance on time and in full each month, as over time, regularly making these payments can improve your credit score. Once your finance is fully paid off it may see an increase to your credit score.
Settling part or all your car finance early shouldn’t negatively affect your credit score. However, if you decide to make additional payments on your car finance, and you miss another payment such as a credit card bill, this will likely affect your credit score.
If you’re looking to find out a bit more about your credit score, discover our other blogs:
How to pay off your car finance sooner
If you are ready to pay off your car finance sooner, we’ve listed some helpful tips on how you can settle your loan early.
Make higher payments each month
If your car finance company allows you to make increased monthly payments, you’ll pay off your finance agreement sooner than the agreed duration. This option can also be easier or more sustainable for some than simply paying off a lump sum at once.
Round up your payments
You might have considered rounding up your monthly repayments.
Rounding up to the nearest £50 may not seem like an awful lot. But it might save you a lot of interest in the long run. Interest is applied for the duration of your loan, and if you can shorten this then you can reduce the amount of interest you need to pay.
Make a larger payment
This may not be possible on a regular basis, but you might have the cash to spare due to a life event or a bonus. You could use this to make a larger one-off payment to shorten your car finance term, if you are able to do so.
Is there a limit to my additional payments?
This depends on your lender and the terms and conditions of your finance agreement. Some lenders may limit the number of extra payments you can make, or not allow them at all. There may also be admin or other charges that you would need to pay. It is always important to check with your lender before you make additional payments.
You can make these payments at any point during the loan term. This brings your final payment date forward, depending on how much additional payment you put forward.
For a better road ahead
Moneybarn is a member of the Finance and Leasing Association, the official trade organisation of the motor finance industry. The FLA promotes best practice in the motor finance industry for lending and leasing to consumers and businesses.
Moneybarn is the trading style of Moneybarn No. 1 Limited, a company registered in England and Wales with company number 04496573, and Moneybarn Limited, a company registered in England and Wales with company number 02766324. The registered address for these companies is: Athena House, Bedford Road, Petersfield, Hampshire, GU32 3LJ.
Moneybarn’s VAT registration number is 180 5559 52.
Moneybarn Limited is authorised and regulated by the Financial Conduct Authority (Financial Services reference No. 702781)
Moneybarn No. 1 Limited is authorised and regulated by the Financial Conduct Authority (Financial Services reference No. 702780)
