The Financial Conduct Authority (FCA) has proposed a series of measures to support customers of motor finance dealers experiencing economic issues during the coronavirus crisis.
The UK regulatory body urged firms not to take steps to end agreements or repossess vehicles if customers struggle to pay.
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The proposal includes a three-month payment freeze or, if that is not in the customer’s interest, waiving interest and charges or rescheduling the term of the loan.
In the case of high-cost short-term credit, which is loans to be repaid within a maximum of a year, companies are expected to implement a one-month freeze free of interest.
The temporary measures include pawnbroking, the buy-now pay-later system, which allows to pay for an item in instalments, and rent-to-own, in which customers commit to rent the car for a certain amount of time.
“Firms and consumers should consider the amount of interest which may build up, and balance this against the need for immediate temporary support,” said Christopher Woolard, interim chief executive at the FCA.