Motor expenses: how to get the help you need

The coronavirus pandemic has left many out of work, on reduced hours, and unable to leave their homes. Naturally, this has had an effect on people’s financial wellbeing, with many unsure what their next best step is.

We’re on a mission to help everyone move on up to a better financial future, which is why we’ve prepared this catch-all guide on what you can do, and to help where we can during this difficult time. We're updating this guide on a regular basis, so you can have all the latest info in one place.




I can’t pay my car finance loan

The Financial Conduct Authority has introduced new measures for car finance agreements. If you’re struggling to make payments, you can now apply for a three month payment break.

Car finance companies have also been told to act fairly. This means not starting the process of repossessing, ending agreements, or changing contracts if customers are currently in financial difficulties due to coronavirus.

If you’re currently in a car finance deal and need to apply for the payment break, contact the lender or dealer as soon as possible. It will not happen automatically.



Will I still pay interest?

If approved for a payment break, interest will still be added to the car finance loan.

At the end of the payment holiday, the lender may increase the remaining payments to cover what was missed. Or, the car finance agreement may be extended.

Make sure you find out what will happen after the payment break before you make an agreement with the lender.


Will the car finance payment break affect my credit score?

If you have an agreed payment break with your car finance lender, it should not appear as a missed payment on your credit score.

If you miss a payment without an agreement in place, it will be treated as a missed payment and could harm your score.

You can see if your payment break has been recorded correctly by checking your free credit report. If it shows a missed payment, you can raise a dispute on your report to get it sorted. You should also double-check with your car finance provider, to make sure it doesn’t happen again next month.

It’s best to check your report on a regular basis, as it may take a while to update.


Check my credit report now

If you make sure everything is as it should be now, it'll make it easier when things go back to normal. With a good credit score, you could get the credit you need when you need it, improve your financial footing, and move on up to a better future.


What is voluntary termination?

If you're in a car finance agreement but no longer want or need your car, you can give it up. This is called voluntary termination and means you can end your car finance agreement early.

If you want to do this, there are two main conditions. Firstly, the car must not be damaged in any way. Secondly, you need to have paid half the total amount you agreed to pay.

If you haven’t yet paid half, this might not be a good option right now unless you can cover the rest of the costs.

If you want to start voluntary termination you should contact your dealer in writing. It’s best to do this by email in the current situation.




I'm struggling to pay my insurance

The Financial Conduct Authority has updated guidance for insurance companies. When you contact a company and tell them you're struggling with payments because of coronavirus, the company should help you and run through different options.

The company should also consider that circumstances are different. For example, you might not be using your car at the moment but still paying the insurance.




What can an insurance company do?

If you tell a company you're struggling, they might offer you a range of options, depending on your individual circumstances. This could include considering if another product would be better at the moment, not charging fees if your policy changes, or postponing payments. If you paid an insurance premium upfront, you may be able to get a refund.

Contact your insurance provider as soon as possible if you're struggling.




Your car and MOT

I can't pay my car finance

If you’re currently in a car finance deal, contact the lender or dealer if you’re worried about missing a payment. Some are now offering payment holidays similar to those you can get for a mortgage.

At the end of the payment holiday, the lender will increase the remaining payments slightly to cover the missed payments.



What is voluntary termination?

If you're in a car finance agreement but no longer want or need your car, you can give it up. This is called voluntary termination and means you can end your car finance agreement early.

If you want to do this, there are two main conditions. Firstly, the car must not be damaged in any way. Secondly, you need to have paid half the total amount you agreed to pay.

If you haven’t yet paid half, this might not be a good option right now unless you can cover the rest of the costs.

If you want to start voluntary termination you should contact your dealer in writing. It’s best to do this by email in the current situation.



I’m not using my car

If you’re no longer using your card it’s ‘off road’ and you can claim some tax and insurance back. This is called Statutory Off Road Notification (SORN). To qualify, you need to not be using the car, and keep it off a public road. You can apply online here.

This is also a useful thing to do if you were in the process of selling it but that’s now not possible in the current circumstances.



My MOT is due

The government is giving people a six month MOT extension for all that are due on or after 30th March. But, vehicles that failed a previous MOT will not be granted an extension.

All vehicles must be kept in a roadworthy condition and garages will be open for urgent repairs.




I’m worried about getting into debt

Debt charity Stepchange offers free help and advice to those struggling. They can guide you through sensitive matters, and have a host of information on their website about debt and coronavirus.

Their phone lines are still open but there are less staff working, so bear this in mind when calling.

Visit the Stepchange website

Citizens Advice is also available to give free and confidential advice. They cover a range of issues, including debt. As well as guides and information online, you can talk to someone online and over the phone, though this may take longer than usual at the moment.

Visit the Citizens Advice website