If you’re struggling with car finance payments because of coronavirus

You had until 31 March 2021 to apply for a car payment holiday, also known as a payment freeze. If your payment holiday is ending, it’s important you understand what happens next, and if you’re still having trouble making the payments, there are still some options available to you, including possibly extending the payment holiday.

What is a car payment holiday?

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The deadline to apply for a car finance payment holiday, also known as a payment freeze, ended on 31 March 2021, but you can apply to extend an existing payment holiday after that date up until 31 July 2021, as long as:

  • it doesn’t go over the six-month maximum payment holiday limit, and
  • there are no breaks in the support/payment holiday

If you’ve already taken your full payment holiday, it’s important you understand what happens when it comes to an end.

Alternatives to a payment holiday

Credit ratings

Coronavirus payment holidays did not affect your credit rating. However, if you reach a different agreement with your lender, it might have an impact on your credit score. It is important you check this with your finance provider.

If you’re still struggling with car finance payments and are unable to get a payment holiday, or your payment holiday has ended, there are still some ways your finance provider can help.

Find out more ways to cut the cost of car finance.

What to do if you can’t afford your increased car payments when your payment holiday ends

The first thing you should do is to get in touch with your car finance lender. Try to do this before your next payment is due.

Your lender is required to consider your situation and offer you additional help.

If you have car finance with an unregulated lender

If your car finance deal is with an unregulated lender and so would not normally fall under the scope of these changes, these providers are also being asked to adopt this guidance. We’ll provide further information when we know more.

Further help and guidance on car finance holidays can be found on the FCA’s websiteopens in new window.

Struggling to contact or reach an agreement with your car finance firm

If you’ve had trouble getting in touch with your lender because of operational difficulties they’ve been experiencing, and so haven’t reached an agreement yet and you’ve then missed a payment which is reported on your credit file, speak to your firm to ask if the missed payment can be removed because you’ve been affected financially due to the COVID-19 crisis.

If this has happened firms should not be charging you for missed payments. If they have, ask your car finance company if these can be paid back.

PCP Guaranteed Minimum Future Value (GMFV) and PCH Residual Value (RV)

Firms should not recalculate the GMFV or RV in a way that is based on temporarily depressed market conditions because of coronavirus in an attempt to recover more of the original car value through your regular payments.

What else can you do

If you‘re struggling to meet your car finance payments, or simply want to cut costs, you might be able to pay off the agreement early or return the car.

If you’re struggling financially due to Coronavirus, find out what other steps you can take to help with your other bills on our Coronavirus and your money page.

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