Millions of auto finance and payday loan borrowers should have more time to pay off …

3 July 2020, 10:18

Loan extensions will be extended.

Image: Getty Images

Auto financing and loan repayment holidays could be extended amid the coronavirus crisis.

People using auto finance plans will be granted an extension of their repayment holidays under new rules.

In an announcement from the city’s watchdog, the FCA, those pay holidays will also cover leasing with option to buy, payday loans, buy-now agreements and pawn shops.

The plans have been put in place to ensure borrowers are supported as businesses get back on their feet amid the coronavirus outbreak.

Lenders were initially asked to halt car finance and payday loan repayments in April, with the rules taking effect for three months.

Loan freeze will be extended until October

The loan freeze will be extended until October.

Image: PA Images

But now that this is coming to an end, those in financial difficulty still need help.

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Christopher Woolard, FCA Acting Chief Executive Officer, said: “It is essential that people facing temporary payment difficulties due to the impact of the coronavirus get the help 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 interests to do so, but for those who need help, it will be there.”

There are also bans on repossessing cars and other property while the payment freeze is in effect, but companies will be able to charge interest.

The guidelines are being consulted until Monday, July 6, and are expected to come into effect by the end of next week.

Who is eligible for the payment freeze?

The rules apply to customers whose financial hardship was caused by the coronavirus.

But under the new rules, payment freezes don’t have to be offered automatically, so you’ll have to ask your lender.

Businesses won’t be expected to investigate your reasons for requesting a payment freeze, but they might deny you one if it was against your interests.

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