Can I get a settlement figure in writing?

Yes. Lenders will provide a formal settlement figure that specifies the total payable as at a stated date. Always get this in writing and confirm the figure's expiry date.

Will I be charged for settling early?

Possibly. Charges can include accrued interest, administrative fees and, for some products, termination fees. Some agreements may also offer a rebate of unearned finance charges.

Do consumer protection rules apply to my business asset finance agreement?

Consumer rules may apply in some cases, but many business-to-business contracts with limited companies are governed by commercial contract terms. If in doubt, request clarity from your lender and seek legal advice.

Can I settle my asset finance agreement early, and are there charges?

Short answer

You can usually settle an asset finance agreement early, but whether you can and what you pay depends on the product and your contract.

Some types of agreement include a settlement figure that may include outstanding capital, accrued interest, and administrative fees, while others may allow a rebate of unearned finance charges.

What “early settlement” means for asset finance

Early settlement means repaying the full remaining balance of an asset finance agreement before the agreed end date.

This can apply to hire purchase, finance leases, lease purchase contracts and conditional sale agreements used by UK businesses.

It does not always work the same way across products, so it is essential to check your specific contract.

Types of asset finance commonly affected

Hire purchase: the borrower usually owns the asset after the final payment or a nominal fee, and a settlement figure will clear the lender’s charge.

Finance lease: the lender retains ownership and early termination often triggers a termination payment rather than a simple settlement.

Operating leases and short-term rentals: these may not permit early settlement or may have higher penalties.

How early settlement figures are calculated

Lenders normally provide a written settlement figure on request that states the total to clear the agreement as at a specified date.

The calculation typically includes outstanding capital, interest accrued to settlement date, and any admin or termination charges permitted by the contract.

Some agreements also include a rebate for unearned finance charges, reducing what you pay if the lender is legally required or contractually agreed to provide one.

Commercial vs consumer rules

Consumer protections such as the Consumer Credit Act and CONC rules can require rebates or set limits for some hire purchase and consumer-style agreements.

Commercial contracts with limited companies or partnerships are generally governed by the contract terms and common law, so consumer rules may not apply.

That means commercial borrowers should expect greater variation and should get a settlement figure in writing.

Typical charges you might encounter

Admin or settlement processing fees: lenders often charge a fixed administrative fee to produce the settlement figure and process repayment.

Early termination fees: finance leases and some hire purchase agreements can include a termination fee which may be a fixed amount or related to remaining rentals.

Accrued interest and residuals: you will usually pay interest accrued to the settlement date and any residual or balloon payment set in the contract.

When rebates reduce the amount payable

Some contracts allow a rebate of unearned interest when you settle early, lowering the settlement amount.

Rebates depend on the product, whether consumer rules apply, and the lender’s approach.

Always ask for a clear breakdown so you can see which elements are being charged or rebated.

Steps to settle early and reduce charges

Step 1: Read your agreement to spot clauses on settlement, termination and any specified fees.

Step 2: Contact your lender to request a formal settlement figure in writing and the date it applies to.

Step 3: Ask the lender to explain every line of the settlement figure and whether a rebate of unearned finance charges is included.

Negotiation and alternatives

Negotiate: some lenders will negotiate admin fees or consider a reduced termination charge where commercial common sense applies.

Refinance or novation: instead of settling early you can sometimes refinance the remaining balance with another lender or transfer the agreement to a new funder.

Sell-and-settle: you can sell the asset and use proceeds to pay the settlement, but ensure the sale value will meet the outstanding balance including charges.

Practical risks, tax and compliance considerations

Tax and accounting: early settlement can change how an asset is treated for capital allowances and VAT, so check with your accountant.

VAT: if you claimed VAT back on purchase or rentals, speak to your VAT adviser before early settlement to confirm any adjustments.

Credit profile: settling can improve gearing and reduce monthly obligations, but ensure the lender confirms the finance is discharged in full in writing.

Regulatory and disclosure notes

Best Business Loans is an independent introducer and does not provide lending itself.

We aim to help you understand options and connect you with lenders or brokers who match your needs.

We do not provide regulated advice and recommend you seek legal, tax or accounting advice where needed.

Quick checklist before you pay a settlement figure

Obtain a written settlement figure and expiry date for that figure.
Check whether a rebate of unearned finance charges applies and how it is calculated.
Ask for a line-by-line breakdown of charges, interest and admin fees.
Confirm how the lender will release any security or asset title after settlement.
Discuss VAT and tax implications with your accountant where applicable.
Get written confirmation that the agreement is discharged once payment clears.

When early settlement makes sense

Paying out early can save you money when the remaining interest and fees are lower than the cost of continuing monthly payments.

It is often sensible when you sell the asset, restructure your finances, or refinance on better terms.

However, it is not always cost-effective, so always compare the settlement figure against future scheduled payments.

How Best Business Loans can help

We don’t lend, but we can connect you with experienced lenders and commercial brokers who specialise in asset finance.

Our AI-driven matching saves time by identifying providers that are actively lending in your sector and who offer suitable asset finance terms.

For a focused start, see our asset finance overview and eligibility guidance here: Asset Finance.

Next steps — get a quick, no-obligation eligibility check

If you’re considering early settlement, get a formal settlement figure from your lender and then speak to a specialist.

Complete our Quick Quote form to get matched with lenders or brokers who can assess whether early settlement is right for your business.

Submitting a Quick Quote is free, confidential and non-binding. We’ll connect you with professionals who can provide a Decision in Principle or help with a formal settlement negotiation.

Key takeaways

Early settlement is usually possible but depends on the agreement type and contract terms.
Settlement figures may include outstanding capital, accrued interest, admin fees and possible termination charges.
Rebates for unearned finance charges sometimes apply, more commonly where consumer rules govern the contract.
Request a written settlement figure, seek professional tax/accounting advice and get confirmation that security is released.
Best Business Loans can help match you with lenders and brokers to explore the best route for settling or refinancing.

If you would like help finding lenders or brokers experienced in asset finance settlements, start a Quick Quote now or email hello@bestbusinessloans.ai for guidance.