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Payment Holidays

The Financial Conduct Authority (FCA) introduces a temporary freeze on Credit Card, Loan and Motor Finance repayments?

Due to the adverse affects of Covid-19 on household finances, as of 9 April 2020, the FCA has announced that there will be a temporary freeze on loan, credit card and motor finance payments, for those experiencing financial dificulties.

The FCA has stressed that those who can afford to pay and keep up with repayments, should continue to do so.

Credit Card Repayments

Credit card providers will be able to offer a three month payment holiday, to consumers negatively affected by the Coronavirus.
The payment freeze will not affect the consumer credit file.

Consumers will need to contact their respective credit card providers directly.
Information regarding applying, will be on the providers websites by Tuesday 14 April 2020.

Overdrafts

Customers who already have an arranged overdraft on their main personal current account, will be able to have 0% interest on overdrawn balances up to £500, for up to a three month period.

Loans repayments

Consumers who have personal and business loans will be able to apply for a payment holiday, with a freeze on repayments, up to three months.

Similarly consumers will need to contact their banks and lenders directly, information should be available on their websites and social media posts.
The payment holiday will not adversely affect consumers’ credit file.

The payment holiday will not adversely affect consumers’ credit file.

Mortgage repayments

Homeowners and buy-to-let landords are able to apply for a mortgage payment holiday, which will need to be applied for directly with the lender.
It is important to bear in mind, that if you take a three month payment holiday, the total amount outstanding will be based on your loan term, minus the three months.
Which means that your monthly payments will increase.

The payment holiday will not adversely affect consumers’ credit file.

When applying for a payment holiday over the phone, it will be worth noting down the representatives name and the time of the call. To ensure, in the event of the lender reporting a missed payment, during the payment holiday. The consumer will have enough information to retrieve details about the call, to prove the holiday had been sanctioned.
This may become problematic when trying to remortgage, if you have a blemish on your credit file.

Motor Finance Repayments

To compliment the other measures the FCA has announced, consumers who are facing financial dificulties, are now able to apply for a three month freeze on motor finance and lease payments.

The payment holiday will not adversely affect consumers’ credit file.

Pennyhills®

Pennyhills® are london bases accountants, specialising in accounting and tax services for entreprenuers, with their businesses across the UK.

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