FCA extends car finance, high-cost repayment freeze
By Iain Gilbert
Date: Friday 03 Jul 2020
(Sharecast News) - The Financial Conduct Authority said it had extended the freeze on car finance and high-cost credit repayments for customers still facing payment difficulties as a result of the Covid-19 pandemic.
The three month extension applies to those with loans from buy-now-pay-later, rent-to-own and pawnbroking firms. Customers were now entitled to ask to freeze or reduce payments for a further three months if they had previously requested deferrals or lower payments.
Following the end of their initial payment freezes, the FCA has asked lenders to contact customers to find out if they can resume payments - and if so, agree to a plan on how the missed payments could be repaid.
However, the FCA implored that anyone who continues to need help, should get it from creditors and that a ban on repossessions should continue until 31 October.
Christopher Woolard, the FCA's interim chief executive, said: "It is vital that people facing temporary payment difficulties because of the impact of coronavirus get the assistance they need.
"For those who have already taken a payment freeze and can afford to start making payments, even partially, it is in their best interest to do so, but for those that need help it will be there."
While the FCA's move would allow customers some breathing room in regards to making payments, Hargreaves Lansdown personal finance analyst Sarah Coles warned that putting off payments should be "a last resort".
"If you've already deferred payments on car finance, buy-now-pay-later, rent-to-own or pawnbroking for three months, you could put it off for another three months," said Coles, although she warned that this came at a price.
"Not only will your interest be rolling up, but it could also make it much harder and more expensive for you to borrow in future. Although it can't affect your credit record, companies will be able to take payment breaks into account when they consider whether or not to lend to you in future. You need to consider whether it's worth the risk of not being able to get a mortgage further down the line."
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