Financial help could smooth road for car loans
By Rob Freeman | 15th April 2020
Borrowers struggling with car loans are poised to follow mortgages and card repayments in being offered a three-month payment holiday.
The measures are set to be introduced by the Financial Conduct Authority and follow government steps to offer a a similar deal for mortgages during the coronavirus crisis.
The authority has already told lenders to offer the payment freeze for borrowers unable to meet repayments under new rules which came into effect today.
Motor finance is not covered by these latest steps to help people struggling to make repayments on personal loans, credit cards, store cards or catalogue credit, but is among other areas being looked at.
Millions of drivers could benefit from a potential three-month hiatus with market for new and used cars worth £38 billion last year - almost one sixth of all consumer credit.
In a statement on its website, the FCA confirmed it was looking at areas not covered by the latest changes, including motor finance, and it expected to "announce specific proposals in due course".
The regulator's chief executive Christopher Woolard told The Times the latest measures were temporary and only applied to people directly affected by the coronavirus who needed short-term financial support.
He said: "We know many people are suffering financial pressures brought on as a result of the pandemic."
Advice on its website (fca.org.uk) says borrowers can ask for a freeze or to make token repayments for three months without affecting credit files.
But it warns that repayments should be continued if possible - in full or in part - as interest will continue to accrue and mean a higher overall cost.
The proposals do not cover payday loans or buy now pay later which are also being considered by the FCA.
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