Customers with a car on finance can now access a three-month payment freeze under temporary new measures introduced by the Financial Conduct Authority.
Anyone with a PCP or PCH car finance plan will, if they’re struggling to make payments due to the coronavirus crisis, be able to request the payment freeze.
Finance companies should not take steps to end the agreement or repossess the vehicle during the payment freeze period, says the FCA.
Customers will continue to be allowed to drive the car.
“We have worked at pace to introduce temporary financial relief,” said FCA interim chief executive Christopher Woolard.
“These measures ensure all consumers affected by the coronavirus emergency can apply for a temporary freeze on their payments.”
No strings attached
Payment freezes should come without strings attached, says the FCA.
Car finance companies should not alter the terms of Personal Contract Purchase or Personal Contract Hire agreements in an unfair way.
They should not, for example, recalculate PCP end-of-term balloon payments due to a coronavirus-related fall in used car values.
Firms should “act fairly where terms are adjusted”.
Many PCP customers rely on the ‘equity’ at the end of a PCP term to help finance a new agreement: recalculating values to a lower level would have a big impact.
Those who have reached the end of their agreement and want to keep their car, but don’t have the cash to cover the balloon payment due to coronavirus-related difficulties, should also be helped, says the FCA.
“Firms should work with the customer to find an appropriate solution.”
The new measures come into force on Monday 27 April.
“Customers should be able to request a payment deferral at any point,” says the FCA, “for a period of three months.”