Can I Extend My Car Finance Repayment Term?

The terms of car finance agreements are set out at the start of your contract, helping you understand how much you’ll pay and how long you’ll pay it for.

However, circumstances can change, and you may find you need to extend your car finance repayment term.

In this blog, we’ll explore whether you can alter the length of a HP or PCP agreement. We’ll also look at what these changes could mean for your overall budget 💷😀

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What are car finance repayment terms?

Car finance repayment terms are the specific conditions and timeframes set out by the lender for repaying a car loan.

These terms outline how long you will be paying back the loan, and how much you'll pay each month.

Whether you've chosen HP (Hire Purchase) or PCP (Personal Contract Purchase) for your car finance, the repayment terms are a crucial part of your agreement.

They determine not only the duration of the loan, but also the total amount of money you'll pay back.  This includes the loan amount, plus interest.

In a HP agreement, your monthly payments are spread over the term to pay off the entire value of the car.

A PCP plan may involve lower monthly payments with a final balloon payment if you choose to own the car at the end of your agreement.

When should I consider extending repayment?

Extending the repayment term of your car finance might be something to consider if you are struggling to afford your current monthly payments.

It could be that you’ve lost your job, or an increase in cost of living has made your repayments harder to manage.

In these circumstances, extending the term can lower your monthly payments, making them more affordable.

However, it's important to factor in that extending your car finance term means you'll be in debt for longer and doing this could also increase the total amount of interest you pay over the life of the loan.

You should always consider the long-term financial implications of making these changes to your agreement and not just the initial lower payments. It’s worth noting that most lenders have maximum term lengths, which could limit the length of your desired loan term.

An alternative may be to refinance your car loan. If you find a better deal, it makes your payments more manageable without extending the term.

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How can I extend my car finance term?

If you're considering extending your car finance term, the first step is to contact your lender.

Most are willing to discuss your situation and may offer options to adjust your repayment plan.

When you approach them, be clear about why you need to extend the term and how it would help your financial situation.

Be prepared to provide updated financial information, as they will likely reassess your circumstances.

The terms of your agreement may need to be renegotiated. This could mean a change in the interest rates and the overall structure of the loan.

Some lenders may require a formal application for term extension, and approval is typically based on your current credit status and payment history.

Will I be eligible to extend my car finance?

It’s often possible to extend your car finance term, but it's subject to approval by the lender.

Whether they let you extend the term will depend on several factors, including your payment history, current financial situation, and the lender's policies.

If you have maintained a good repayment record and have valid reasons for needing an extension, your request is more likely to get accepted.

Be aware that an extension may affect the total cost of your loan.

Longer terms usually mean more interest payments. So, while your monthly payments may decrease, the overall amount paid by the end of the term could be higher.

If you feel that refinancing your loan may be a better option, use our refinancing calculator to work out the costs.

Always take your time to compare your options before deciding if extending your car finance repayments is the right move 👍😃

FAQs about extending your car finance repayment term:

Am I eligible to extend repayment?

Eligibility for extending a car finance repayment term depends on your agreement with the lender and your repayment history. Lenders often consider your current financial situation and past payment record.

Can I extend my car finance term if I've missed payments?

Extending your finance term after missing payments can be difficult. Lenders typically view missed payments negatively, but it's worth discussing your situation with them.

Is there a penalty for extending car finance repayment?

Some lenders may impose penalties or additional fees for extending the term of your car finance. It's important to understand these potential costs before deciding to extend your agreement.