Car Finance Payment Freeze Announced by FCA

A:Jerri Murtagh

The Financial Conduct Authority (FCA) has announced that anyone with a finance agreement in place on a car can now request a three-month payment freeze, under new temporary measures to help customers during the current coronavirus pandemic.

The measures, which came into effect yesterday (27th April), apply to both Personal Contact Purchase and Personal Contract Hire finance agreements and ‘should come without strings attached’, said the FCA.

This will allow customers who are having temporary difficulties making finance or leasing payments due to the COVID-19 lockdown to defer these for up to three months.

The regulator also said that lenders should not take steps to end agreements or repossess vehicles if customers are experiencing difficulties making payments given the current climate. They will also not be allowed to alter the terms of their finance agreements in an unfair way, for example by recalculating the end-of-contract balloon payment on PCP contracts.

Christopher Woolard, the FCA's interim chief executive, said: "We have worked at pace to introduce temporary financial relief tailored for a range of specific credit products.

"Many firms are already working with their customers, but these measures ensure all consumers affected by the coronavirus emergency can apply for a temporary freeze on their payments."

Customers should be able to request a payment deferral at any point following the announcement.

Anyone who is unable to start making payments again at the end of their payment freeze should contact their lender to resolve difficulties in advance of any payments being missed.