The FCA proposes a freeze on financial payments for cars in difficulty …

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The Financial Conduct Authority (FCA) has announced a package of measures that could ease the pressure on motorists struggling to keep up with financial payments during the COVID-19 pandemic.

The range of measures covers not only the financing of motorcycles and cars, but also short-term credit (payday loans), buy-it-now contracts, subsequent purchase contracts, leasing with option to buy and the pawnshop.

For motor vehicle financing, the FCA is asking all businesses to grant a 3-month payment freeze to customers who have temporary meeting or rental finance payments due to the COVID-19 crisis. The new guidelines mean that companies should not take action to end agreements or repossess vehicles from distressed motorists.

They also suggest that companies help find an “appropriate solution” for circumstances in which the customer wishes to keep the vehicle at the end of the PCP agreement but cannot cover the cost of the lump sum payment.

They also say companies should not change customer contracts unfairly. For example, companies should not try to use temporary depreciation in car prices, as can be caused by a situation like the COVID-19 pandemic, to recalculate personal contract purchase lump sum (PCP) payments. at the end of the term.

COVID-19 PCP and HP Tips

If you are struggling to keep up with your financial payments due to the COVID-19 pandemic, the first thing you should do is contact your loan company and let them know about the situation. One measure offered by the FCA is a payment deferral (such as a three-month payment break) where the customer makes a zero monthly or weekly payment or a £ 1 token.

While a three-month payment break might seem nice, clients should be aware that the overall term and interest on the loan will be affected, which could make moving a less useful option in the long run. In these circumstances, lenders are advised to consider other methods of easing pressure on customers – possibly waiving interest, reducing payments, or rescheduling the term of the loan.

For more information on FCA advice, visit: fca.org.uk

For more information on how to stay safe during the COVID-19 pandemic, visit: gov.uk/coronavirus

For more information on driving during COVID-19, please visit: www.visordown.com/when-can-i-ride-my-motorcycle-during-covid-19-lockdown

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