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What to do if you’re struggling to pay your car finance

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Coronavirus has left many re-assessing their finances amid possible job losses and a worsening economy. If you’re struggling or believe you will face difficulty repaying your car loan, here are your options.

Whether you have a hire purchase deal, a personal contract purchase or are leasing a vehicle, the headlines surrounding coronavirus are a cause of concern for drivers.

The markets are in freefall, job losses and administrations are inevitable and Brits are tightening their purse strings in response.

With £48bn of finance for new and used cars agreed with consumers last year alone, many motorists will be worrying about how they’ll pay their car loans.

Stephen Haddrill, director general of the Finance & Leasing Association (FLA), said: “Supporting customers over the next few months will be absolutely vital – especially for those whose income is severely affected by the coronavirus disruption. FLA members are there to help, so it’s important to keep talking to your lender.”

The FLA added firms should be showing forbearance during these extraordinary times and the need to help customers is “paramount”.

As such, for those unable to meet monthly payments or the end of agreement balloon payment, forbearance should mean cars remain with drivers, rather than being repossessed.

Customers can find the contact details of their lender on their finance agreement, but if they need further assistance, they can email

Speaking on LBC radio on Sunday, consumer lawyer Dean Dunham said with other lenders giving customers three month payment holidays in the current situation, car finance firms are likely to show leniency, though he hasn’t heard of any cases where the contract has been ripped up.

He told listeners to contact their car loan firms and explain the situation and ask for forbearance during these unprecedented times.

Customers may be able to negotiate a monthly payment reduction, delay a balloon payment or have interest suspended.

Under the City regulator’s (Financial Conduct Authority) rules which apply to regulated firms operating within consumer credit lending, it states they must treat customers in arrears fairly, particularly those considered vulnerable.

The FCA handbook states: “A firm must treat customers in default or in arrears difficulties with forbearance and due consideration.”

Examples of treating a customer with forbearance include: considering suspending, reducing, waiving or cancelling any further interest or charges (for example, when a customer provides evidence of financial difficulties and is unable to meet repayments as they’re due or is only able to make token repayments, where in either case the level of debt would continue to rise if interest and charges continue to be applied.

Firms could also allow deferment of payment of arrears as long as it doesn’t make the term for repayments unreasonably excessive. Further, where a customer is in default or in arrears difficulties, a firm should allow the customer reasonable time and opportunity to repay the debt.

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