MOTOR finance companies are already starting to offer payment holidays to customers struggling financially during the COVID-19 pandemic.
MotoNovo Finance has introduced the measures including:
- A flexible period of breathing space, or zero or reduced payments for up to three months can be offered to ease any immediate anxiety associated with a customer’s ability to meet their regular monthly repayments;
- No customers will be charged default interest or arrears related fees during this period of uncertainty. Refunds will also be given for any fees that have applied in recent weeks.
- Protecting the credit file of people who take advantage of any of MotoNovo’s ‘forbearance’ support offers with credit reference agencies implementing a measure called ‘Emergency Payment Freeze.’
This follows last week’s announcement from the Financial Conduct Authority calling on motor finance firms to help customers during the lockdown period.
MotoNovo Chief Executive Mark Standish said: “The announcement from the FCA reaffirms the steps that we and I’m sure other motor finance lenders have taken to help customers facing an unexpected financial challenge, as a result of COVID-19 impact are on the right track.
“It also underlines the importance of providing support at an individual level, recognising the 3-month payment freeze that has grabbed the headlines, may not be suitable to everyone.
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“We have already agreed support for circa 20,000 customers. We have also deployed an additional 122 people to our customer support teams, taking the total workforce to 288 to meet the increase in demand.
“These teams are primarily focused on calls and online responses, but we also have a number of digital solutions available to support customers to self-serve.
“Even with additional measures in place, the crucial importance of responding to each person that contacts us and understanding their circumstances means it will take time to respond to every person.
“This is far from ideal, but every person can be assured that our simple aim is to help as many people as possible to continue their car finance in a manner they can afford, minimising the financial stress they might otherwise face.
Black Horse Motor Finance said it has given more than 60,000 payment holidays while the Finance and Leasing Association said calls to lenders are 20 to 30 times higher than usual.
The FCA has also said that customers should not be penalised for any temporary falls in vehicle values, adding that finance providers should not “use temporary depreciation of car prices caused by the coronavirus situation to recalculate Personal Contract Purchase balloon payments at the end of the term”.
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