Thousands of motorists who are struggling to keep up with their car finance payments will soon be able to access relief on their bills, the Financial Conduct Authority (FCA) has announced.
It will follow on from mortgage holidays and a three month break on credit card and loan payments from today.
"We know there is still more work to be done, and we will be announcing further measures to support consumers in other parts of the credit market in the future, including in the motor finance sector next week," FCA chief executive, Christopher Woolard, said on Thursday.
Some car manufacturers have already agreed to freeze monthly interest payments for up to two months due to coronavirus, however new guidelines will state exactly what firms must offer to safeguard those at risk of falling into debt.
Toyota, for instance, has already said that drivers will be able to apply for an interest-free payment holiday or a reduction on their monthly payments if they are struggling.
Ford said the same, but added that customers may be able to get a payment extension too.
Volkswagen, whose brands include Audi, Seat and Skoda, said that customers will be offered a "breathing space" of up to 60 days.
Hyundai and Mercedes-Benz said customers should get in touch if they're struggling, but they haven't yet specified the support on offer.
The Finance and Leasing Assocation (FLA) said support measures may include payment breaks, payment reductions or waived interest.
If you're struggling to make your monthly payments, contact your car dealer for help as soon as possible.
High street dealers will be closed, so get in touch online or over the phone.
Hyundai Finance, for example, is urging customers who can't make their monthly payment to call only if it's due in the next 10 days.
"Lenders are working flat out to provide help but with reduced staff numbers it will take longer to get through. Please bear with them," the FLA said.
What is a payment holiday and is it a good idea?
Payment holidays essentially defer your bills for a set period of time.
It means you won't be charged for this period, and your credit score won't be affected.
However, interest payments will continue to rack up - which means you could end up paying more in the long run.
Those who opt for a payment holiday should be aware that they could end up paying more over their vehicle's lifetime. This is because your payment term will be extended, and 3 months' worth of interest will be added to it.
If you don't want to extend your lease, you will have to increase your monthly repayments to factor in the missed months.
