Payment holidays for car finance extended by six months

  • Further extensions
  • How to get a car payment holiday
  • Best advice is to contact your finance company

The car payment holiday scheme for car finance deals has been extended by six months in a bid to help customers struggling with the effects of the Coronavirus pandemic.

It was initially due to end on 31 October 2020, but the financial regulator of the UK, the Financial Conduct Authority (FCA), has confirmed it will extend the measures.

Consumers will have until 31 March 2021 to apply for an initial or a further payment deferral. After that date, they will be able to extend existing deferrals to 31 July 2021, provided these extensions cover consecutive payments, and are subject to the maximum six months allowed.

Interim executive director of strategy and competition at the FCA, Sheldon Mills, said: 'For those continuing to face payment difficulties as a result of coronavirus, these measures will ensure they continue to be able to access much needed support during this crisis. We also want to highlight that tailored support will still be offered and remains the most appropriate option for many borrowers.'

Car payment holiday extension

The FCA has confirmed that payment deferrals and other support to personal loans, credit cards, motor finance, rent-to-own, buy-now-pay-later and pawnbroking customers who are experiencing payment difficulties because of coronavirus.

This means that:

> Those who have not yet had a payment deferral will be eligible to apply for payment deferrals of up to six months in total.

Those who currently have a payment deferral will be eligible to apply for a further deferral, as long as the total length of deferrals doesn't exceed a maximum of six months in total.

Those who have previously had a payment deferral of less than six months will also be eligible to apply for a further payment deferral, as long as the deferrals don't exceed six months in total.

Consumers who have already had six months of payment deferrals or who are in arrears or receiving tailored support, will not be eligible for a further payment deferral. Instead, firms will provide tailored support appropriate to their circumstances. This may include the option to defer further payments.

History of car payment holidays

In April 2020, the FCA announced that finance companies must give three-month payment holidays to customers who were struggling to keep up payments because of Coronavirus.

During this three-month freeze cars would not be repossessed, plus, car finance companies could not charge contracts 'in a way that is unfair.'

In July, the financial regulator agreed to new plans that saw the car-payment holiday scheme extended for another three months. Then in November, it was extended by six months.

The car payment holiday scheme made sure that:

> Firms had to provide support by freezing or reducing payments to a level consumers can afford. Firms also needed to provide people who have already taken up the scheme this additional extension or a temporary reduction in payments.

> There would be a ban on repossessions.

What this means for you

Whether you've taken advantage of one of these schemes or not, payment holidays are here to stay for the foreseeable future.

However, if you've already paused payments for six months you won't be entitled to another break. Instead, lenders should provide 'tailored support' - although this type of support could be reported on your credit file.

Also, firms assessing your payment deferral can choose to deny if it is 'obviously not in a customer's interest.'

The FCA has urged borrowers who can afford to make repayments to continue to do so.

Payment freezes or partial payment freezes offered under this guidance should not have a negative impact on credit files. However, credit files aren’t the only source of information lenders can use to assess creditworthiness.

Car payment holidays

Car payment holiday advice

The blanket advice is for customers to contact their financial providers. James Fairclough, CEO of AA Cars, said: 'It's important to note that lenders will not make special arrangements automatically. The onus is on drivers to contact their lender before they run into difficulty. Call centres are understandably busy at present, but many providers are offering payment holiday request forms online.'

Both car companies and lending firms are urging customers to get in contact, rather than simply stopping making payments. This is because just stopping can affect your credit rating.

Car manufacturers, generally, have been well ahead of the curve. Most have been offering payment holidays since March 2020.

>> New car payment holiday schemes: get a new car with nothing to pay for the first three months

Skip to see what individual car makers are saying about car finance payment holidays below:

Alfa Romeo

Land Rover





What is a car payment holiday?

It's a term borrowed from the mortgage market. A car payment holiday works in the same way as a mortgage payment holiday.

It essentially involves customers temporarily stopping car payments. At the end of the holiday, the finance company will recalculate your monthly payments to make up for the shortfall.

Payment holidays for new cars

Payment holidays aren't just the reserve for people locked into a contract. At a time when new car sales are down 97%, carmakers are keen to kickstart the resurgence in new car sales. 

One tactic to encourage sales has been to extend payment holidays to buyers of brand new cars too, essentially giving customers the option of not paying anything for the first few months of an agreement.

2020 Vauxhall Corsa

Ford is offering new car buyers up to six months of payment holidays. The 'Peace of Mind' programme runs April-May 2020 and offers customers three months of deferred payments, followed by a cash payment covering the next three months.

SEAT is offering payment holidays for new cars too. Customers will get the chance to not pay anything, including a deposit, on nearly every model in its range, via a three-month payment holiday.

Skoda is offering something slightly different. It's not a payment holiday as such - it's offering to cover the first three months of car pay payments for new car buyers, along with hefty deposit contributions.

Vauxhall is also looking to cash in via a payment holiday. The British car firm is offering a three-month payment holiday for new car buyers, in conjunction with its 0% APR deals. Plus, Vauxhall is offering a job loss payment waiver. This allows customers to waive up to six monthly instalments if they're made redundant involuntarily.

What car companies have to say:

BMW payment holiday:


BMW says: 'BMW Group Financial Services will treat each case individually and work with customers to support where we can, based on their individual circumstances. For customers experiencing financial difficulties as a result of COVID-19, we recommend they contact BMW Group Financial Services at their earliest opportunity.'

Parkers says: No specific advice about payment holidays, yet. Contact BMW for more advice.

Fiat payment holiday:

(Abarth, Alfa Romeo, Chrysler, Fiat, Jeep, Maserati)

Fiat says: 'We ask those customers who are experiencing payment issues to please contact our customer support team. We will look at the individual circumstances and address them on a case by case basis.'

Parkers says: Standard response. No specifics as of yet.

Ford payment holiday:

Ford says: 'With customers always a top priority, Ford offers a number of tools to help vulnerable customers regardless of the situation. These differ slightly country by country but currently include reduced payments, payment extensions, payment holidays and pre-arrears forbearance. Plans include extended payment arrangements, payment holidays for all markets, cancellation of late fees and charges, and flexibility on payment methods.'

Parkers says: Payment holidays are on the cards for current Ford customers. Interestingly, Ford has also become the first company to offer payment holidays for new customers too.

Honda payment holiday:

Honda says: 'As a responsible lender authorised by the Financial Conduct Authority, we are watching the current situation closely and understand that many of our customers will be directly or indirectly affected by COVID-19. We encourage all customers to make early contact with us and any other lenders if they are experiencing financial difficulty so that a suitable solution can be discussed which is appropriately tailored to your circumstances.'

Parkers says: No specific mention of payment holidays. Although, a source at Honda tells us it's on the cards if things get more serious.

Hyundai payment holiday:

(Hyundai, Kia)

Hyundai says: '(We) have in place a number of measures to assist customers in repaying their finance agreements should they experience financial difficulty. Whilst this may include a payment holiday, each customer's individual circumstances will be considered at all times.'

Parkers says: Payment holidays are on the cards, dependent on your individual circumstances.

Jaguar payment holiday:

(Jaguar, Land Rover)

Jaguar says: 'As the impact of coronavirus is felt across the UK, customers may have concerns. We've put in place some additional support to help. If customers' income has been affected by the disruption from the coronavirus, we have a range of options to help, which include payment deferrals on finance agreements, with additional support provided when they need it. Our key priorities are to keep essential workers mobile and to support customers in need of a payment deferral where their payment is due within 7 days.'

Parkers says: Payment deferrals are available for people whose income has been affected - but only when their payment is due within seven days. Once again, contact Jaguar for specifics.

Mazda payment holiday:

Mazda says: 'Each case will be treated as an individual case and depends on a number of factors. While each case will warrant its own outcome, customers will be able to discuss things like rescheduling their monthly payments and/or payment holidays.'

Parkers says: Although on an individual basis, payment holidays are available. Ring Mazda as soon as possible.

Mercedes-Benz payment holiday:

(Mercedes-Benz, Smart)

Mercedes-Benz says: 'Mercedes-Benz Financial Services will be working closely with customers facing financial difficulty – reviewing each request on a case-by-case basis and ensuring the best possible outcomes for them.'

Parkers says: Standard answer here from Mercedes. Get requests in as early as possible.

MG payment holiday:

MG says: 'Not being a lender, it would be inappropriate to comment on customer repayments. Advice for MG owners is to contact Santander directly.

Parkers says: Robust wording from MG. Clearly not in any rush to help customers. Advice is to contact MG's finance provider.

Mitsubishi payment holiday:

Mitsubishi says: 'Obviously this is a fast-changing situation. Right now we're advising customers to contact their lease or finance companies, and that includes our own, and explain the situation to them. Most are willing to work with customers in genuine distress.'

Parkers says: Not much specifically here. But, Mitsubishi sells a lot of pickups. If you're after van or pickup related information specifically, read What to do if you need a payment holiday on your van or pickup finance.

Nissan payment holiday:

Nissan says: 'In these challenging times, our customers remain our top priority. As a responsible lender, Nissan Finance understands that a number of customers may be affected by the impact of COVID-19 Coronavirus. If any of our customers have been impacted, we will be here to support them. Customers can contact us via our customer portal, email or telephone to discuss any concerns they may have.'

Parkers says: Nothing specific about holiday payments. We will update when we hear more.

Peugeot payment holiday:

(Citroen, DS, Peugeot)

Peugeot says: 'If you are experiencing issues such as financial difficulty as a result of the pandemic then please contact us as early as you can to understand what options are available. On our financial support page, you will find out more information about how we and other organisations may be able to help you.'

Parkers says: Another company asking you to get in contact. Although, Peugeot reassures us that there are numerous ways to do this.

Renault payment holiday:

(Alpine, Dacia, Renault)

Renault says: 'As a responsible lender, Renault Finance understands that a number of customers may be affected by the impact of COVID-19 Coronavirus. If any of our customers have been impacted, we will be here to support them. Customers can contact us via our customer portal, email or telephone to discuss any concerns they may have.'

Parkers says: Renault has assured us that once they know about payment holidays, they will tell us. The French carmaker is waiting to hear back from its finance provider, RCI Bank. Renault is our new-car finance of the year winner, so we hope for big things.

Suzuki payment holiday:

 Suzuki says: 'Our customer's peace of mind is a top priority for Suzuki Finance and we have implemented special measures to support customers impacted by COVID-19. If the income of a customer has been affected by the disruption of Coronavirus, we have a range of options to help including payment deferrals, along with additional support if required.'

Parkers says: Suzuki looks like it's taking the right steps here. Like others, the main advice here is to contact Suzuki's customer support team.

Tesla payment holiday:

Tesla: 'Speak to Black Horse and JBR Capital who offer finance options to Tesla customers, they'll be better placed to let you know if they have anything in place.'

Parkers says: One of the negatives of driving a car from a small manufacturer is the lack of customer support. Tesla is asking you to do the groundwork and contact either of its finance providers.

Toyota and Lexus payment holiday:

Toyota: 'If anyone in difficulty should contact the company as soon as possible to discuss options.'

Parkers: Short and simple response from the world's biggest carmaker. Nothing concrete about payment holidays.

Vauxhall payment holiday:

Vauxhall says: 'As a business we will of course endeavour to support all of our customers through this challenging period and are committed to finding agreeable solutions to any particular challenges that they may face.'

Parkers says: Nothing definite yet. However, Vauxhall has said that it will continue to update its website, and is creating an FAQ about financial options.

Volkswagen Group payment holiday

(Audi, Bentley, CUPRA, Lamborghini, Porsche, SEAT, Skoda, Volkswagen)

Volkswagen says: 'Our ultimate objective is to keep customers in their vehicles as long as possible, and we know that our customers have varying individual circumstances.

'There are a number of options to support our customers who find themselves in financial difficulty; these include (not limited to) agreeing an affordable repayment plan over an extended period of time and allowing customers breathing space to consider their finances for up to 60 days. As always, we have been working closely with the regulator during this period and following the release of the FCA's temporary final guidance on the 24th April, we are now offering payment deferrals (payment holidays).

'We have responded to the guidance quickly, and have worked extremely hard to ensure customers are now able to submit a request for a payment deferral using our online form.

'Each customer will have their own individual circumstances, and it's important to note that the regulator acknowledges that a payment holiday may not be in the interests of all customers experiencing temporary financial difficulty and where it is not considered appropriate, organisations must offer other ways to provide temporary relief. We will work with the customer to provide the best possible solution for their individual needs and deferral requests are subject to a suitability check. This is to ensure that this will not worsen the financial situation of the customer, based on their individual circumstances.'

Parkers says: Good, solid advice here from Volkswagen, a company that is generally ahead of most other manufacturers when it comes to payment holidays.

Volvo (Polestar, Volvo) payment holiday

Volvo says: 'We understand that our customers may have many concerns during this unprecedented period, and we will do all we can to support them. This includes monthly payments, and we are working with our finance partner, Santander Consumer, to explore the available options for our customers. Any customer worried about financial difficulties should contact Santander Consumer.'

Parkers: Volvo has certainly put some thought behind what it will do - and it continues to work at it. However, if you want to report a change in finances now, contact Santander.

Further reading

>> Coronavirus (COVID-19) advice for drivers

>> Government launches plan to make smart motorways safer

>> Vauxhall adds 0% APR to new Corsa

>> The best new car deals

>> Car scrappage schemes: how much can you save?