Car finance customers to be offered three-month payment freeze
Car finance customers struggling to meet repayments should be offered a three-month freeze on payments and interest, according to new guidance from the FCA.
The financial regulator also said that customers experiencing temporary financial difficulties with Personal Contract Purchase, Hire Purchase and Contract Hire agreements due to coronavirus should not have their agreements or repossessed.
The FCA guidance, which could affect opt-out drivers, also said that firms should not change customer contracts in a way that is unfair, for example using temporary depreciation of car prices caused by the coronavirus situation to recalculate Personal Contract Purchase (PCP) balloon payments at the end of the term.
And where a customer wishes to keep their vehicle at the end of their PCP agreement, but does not have the cash to cover the balloon payment due to coronavirus-related financial difficulties, firms should work with the customer to find an appropriate solution.
The guidance has been welcomed by Lloyds Banking Group.
Richard Jones, managing director of motor finance and leasing, said: “Since the start of the pandemic, we have already helped more than 50,000 personal customers using the temporary support measures we have introduced. Customers can apply to defer their payments for up to three months on Personal Contract Purchase, Hire Purchase and Contract Hire agreements by using our new online service, which enables most customers to action their request instantly. There are no missed payment fees and a customer’s credit rating will not be adversely impacted.”
Jones added that Lloyds has already put a range of options in place to help businesses.
“We have already granted payment holidays to more than 3000 of our fleet customers,” he continued. “Those with up to 20 vehicles on fleet can apply to defer their payments online, and those with fleets of more than 20 vehicles should contact their account manager directly to discuss the support that’s on offer.”