Managing your finance
How to Read Your Car Finance Agreement
How to read your car finance agreement — the key figures and clauses that actually matter.
To read your car finance agreement, focus on five things: the total amount payable, the APR, the term, any balloon or final payment, and your rights to settle or terminate early. Everything else is detail around those numbers.
Your agreement is a legal contract, but the figures that matter are easy to find once you know what to look for. Here's how to read it.
How do you read a car finance agreement?
Start with the key financial figures: the amount borrowed, the APR, the term, the total amount payable, and the monthly payment. Those five tell you what the deal really costs.
The total amount payable is the single most useful number — it's everything you'll hand over by the end. Compare it with the car's price to see the cost of the finance. Put any figure to work on the settlement calculator.
The key figures to find
Work through your agreement in this order to understand the deal.
- Amount of credit: how much you actually borrowed (price minus deposit).
- APR: the yearly cost of the finance, including interest and compulsory fees.
- Term: how many months the agreement runs for.
- Total amount payable: every payment, deposit, balloon and fee added up.
- Final payment: the balloon (GMFV) on a PCP, or the option-to-purchase fee on HP.
The clauses that matter
Beyond the numbers, check your early settlement rights, the voluntary termination clause, mileage limits, and what counts as fair wear and tear. These shape your options later.
Your right to settle early and to use voluntary termination comes from the Consumer Credit Act 1974, but your agreement spells out the specifics. On a PCP, the mileage limit and condition terms decide any end-of-deal charges.
Working out your own numbers
Once you've found the key figures, you can check the lender's maths and plan your options. The total amount payable drives everything.
Halve the total amount payable to find your voluntary termination point, or estimate an early exit on the settlement calculator. If you're not sure who your lender even is, see how to find your lender.
Frequently asked
What should you look for in a car finance agreement?
What is the total amount payable?
Where do you find your APR on a car finance agreement?
How do you find your voluntary termination point?
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