Payment holidays for loans, credit cards, car finance and more set to be extended
The financial regulator is set to extend payment holidays for credit cards, personal loans, car finance, payday loans and other types of consumer credit, after the Government announced a second national lockdown in England.
Payment holidays for those with various types of credit were originally due to close on 31 October, but those struggling to pay may soon be able to apply for a deferral of up to six months, the Financial Conduct Authority (FCA) said. It comes after the Government announced on Saturday that mortgage payment holidays will also be extended - more detail on that is expected later today.
For all our guides on the financial fall-out of the pandemic, see our Coronavirus Help section.
What is the FCA proposing?
When you take a payment holiday, it means you stop making payments on what you've borrowed for the time being, though you'll still have to pay off what you owe later and interest usually racks up even while you're not repaying.
The FCA said today it will propose changing its temporary guidance on personal loans, credit cards, motor finance, rent-to-own, buy-now-pay-late and pawn broking. Under its proposals to support those financially affected by coronavirus:
- Borrowers who've not yet had a payment holiday can apply for one. This could last up to six months.
- Borrowers who are currently on their first payment holiday can apply for a second.
For high-cost short-term credit (such as payday loans), borrowers would be able to apply for a payment deferral of one month if they haven’t already had one.
The regulator says it's working with trade bodies and lenders on how to implement these proposals as quickly as possible. But as these are still technically proposals at this stage, you shouldn't contact your lender until they've been confirmed.