Across the UK and the rest of the world, most people’s lives have been turned upside down by the Coronavirus crisis. Even where businesses and households haven’t been hit directly by the virus itself, the economic impact of COVID-19 has been devastating.
Mass unemployment, heavily reduced income and hundreds of organisations going out of business entirely, all with the prospect of more to come.
Subsequently, millions have found themselves in a position where they are unable to keep up with their outgoings, through no fault of their own. Bad credit car finance repayments have become problematic for many households, who simply do not have the means at their disposal to repay their debts.
Be sure to use a car finance calculator prior to taking out any loan to ensure you can meet the payments.
New Measures Announced by the FCA
It’s a difficult and regrettable scenario to say the least, but there is at least some relief available for struggling households. The Financial Conduct Authority has announced an extension to the measures it recently introduced to help customers keep up with their car finance payments.
Stretching into 2021, the FCA’s new guidelines state that carmakers, dealerships and lenders in general should offer their customers a second three month repayment holiday, available on request. This means that if you’ve fallen behind and your payments or believe you’re likely to do so, you should be able to request a three month payment break from your lender directly.
Under the current circumstances, it’s highly unlikely you’ll be refused just as long as you’ve kept up with your repayment obligations to date.
Where Repayment Problems Persist
Given the extent of the financial problems many households are experiencing right now, a three month payment break could be wholly insufficient. You may have lost your job, seen a sharp fall in income or for any other reason entered into a period of ongoing economic hardship.
In which case, simply halting your repayments for three months may not be enough. As above, the first thing to do when repayment problems are likely to persist is to speak with your lender. Now in particular, car finance companies are showing empathy and understanding to their customers, often providing an extremely flexible and accommodating repayment options to suit most budgets.
It’s rarely in the best interests of a car finance company to go through the pain, hassle and expense of repossession proceedings, they’ll typically do anything they can to help their customers retain possession of their vehicles.
Is it Possible to Simply Hand Back the Vehicle?
Whether or not you’ll have the option of simply handing back the vehicle and walking away with your debt cleared depends entirely on the specifics of your contract and the lender you’re working with.
It may be possible, but this is nonetheless considered the ‘nuclear’ option by most responsible lenders and won’t be necessary, other than as a genuine last resort. Even if the terms and conditions of your contract put you in a difficult position, it’s still worth speaking to your lender at the earliest possible stage as they may show more leniency than you’d expect.