With the UK Government winding back furlough support from July and further job losses expected during the remainder of 2020, Nationwide Vehicle Contracts is urging car finance customers to start planning their finances to ensure they avoid any defaults of car leasing payments.
The company warning of potential long delays for financial assistance, which could cause customers to default on their payments before they have had a chance to speak to their finance provider.Nationwide director Keith Hawes said: “If you are in the unfortunate position of having recently been made redundant or are worried that you may be over the coming months, we urge you to take action now. Many finance providers are dealing with an unprecedented number of requests so it may take longer than anticipated to speak to someone.”
“If your financial circumstances change due to redundancy or a reduction in household income, business closure, becoming ill or something else beyond your control, you may suddenly find that you are unable to keep up with the monthly rentals on your lease vehicle.
“This can be a distressing situation, and understandably can lead to stress and panic, but the important thing is to make sure you know your options and take appropriate action in a timely fashion.
To apply for financial assistance, customers are required to provide a brief description of their current financial challenges and details about any Government assistance schemes they have applied for.
They also need to give a brief explanation of how they will be able to meet future payments, including the repayment of any payment break instalments before the finance provider is able to consider their case.
Hawes added: “Some customers mistakenly assume that they can just hand their car back and stop making their rentals if they run into financial problems, but this isn’t the case. While most leases include an early termination clause, there can be significant charges for doing this.
“Depending on the type of lease agreement you have, you may be required to pay off the outstanding rentals in full if you return the vehicle before the end of your agreement.
“We advise that you speak to finance provider in the first instance to see what options are available to you. You may be able to take a payment break of up to three months, which can give you some breathing space until your situation improves.
“Or, you may be able to negotiate repayments on an affordability basis, such as extending the length of the lease to lower your monthly payments.”
Although funders are required to act sympathetically when considering support for customers who find themselves in financial difficulties, Nationwide warned that it can take up to 21 days before finance providers can respond to requests for financial assistance, so planning ahead is crucial.
Hawes said: “Many finance providers are dealing with an unprecedented number of requests, so be aware that it may take longer than anticipated to speak to someone. Think very carefully about your budget and other potential sources of finance to help cover you until you’re able to sort out an arrangement with the provider.
“Having said that, we would strongly recommend that you do not turn to high cost or “payday” loan arrangements.
“Remember, if you do encounter financial difficulties, do not amend or cancel your Direct Debit without talking to the finance provider first.