UPDATED: Coronavirus: What the FCA’s help for car finance customers means to you

Update: We’re still here if you need us

**We understand that some of our customers continue to be financially impacted by the Coronavirus and, if you’re in that position, we’re still here to support you. There are several options available, and we’ll work with you to find the most suitable for your individual situation. **

If you’re currently on a payment plan or freeze for your Zopa hire purchase finance, we’ll be in touch before it ends to agree together what happens next. If you want to get ahead, you can always work through our budget tracker, to help you to understand your current situation in detail. Visit budget.zopa.com

Rest assured, if your finances aren’t impacted by the Coronavirus now, but you’re worried that they might be in the future, we’ll still be here to help. We always explore ways to support our customers when their circumstances change – we have a dedicated team for this. You just need to give us a call.

What the FCA’s help for car finance customers means to you

The below was originally posted on 29th April 2020 – we have now included specific updates for certain areas below following the FCA’s latest announcement in July on extending payment plans and freezes for motor finance customers:

In late April, the Financial Conduct Authority (FCA) announced another round of proposed measures that financial providers should follow to help consumers financially affected by Coronavirus; this time looking at secured motor finance and high-cost credit agreements.

Buying a car on finance is common for drivers, but for those currently financially affected by the Coronavirus, making their full monthly payments may not be possible. We believe the announcement is another positive move from the FCA to protect those who need help during these uncertain times.

At Zopa, we provide Hire Purchase agreements to consumers via like-minded dealers, direct via our website, and through comparison websites. We understand that a number of our car finance customers have been affected by the Coronavirus so, as we are doing for our personal loan customers, we are now offering a variety of options to help with repayments in the short term. Depending on your circumstances, we’ll work with you to find the best solution_._

While we believe this is a crucial step to help customers, it’s important to highlight the key information on the FCA’s new measures to help you make the right decisions, so we’ve outlined what they mean for drivers today.

Why has the FCA focused on motor finance?

Following its new measures on unsecured personal loans, overdrafts and credit cards, the FCA believes that addressing more credit products should help to support more people during the Coronavirus pandemic.

Most car finance deals result in customers paying large monthly repayments, so the FCA has proposed that financial providers should offer customers a three-month payment freeze if they are having short-term financial difficulties.

Is a payment freeze the best option?

There are several options Zopa is able to offer impacted customers, for example, reduced payment plans or even freezing payments for a while, to give you some breathing space if your finances have changed recently because of the Coronavirus. The options that are offered will depend on your individual circumstances and our team will work with you to come to a specific arrangement.

For some customers, a payment freeze might not be the best option. This is because the missed payments start to build-up and you’ll need to be able to pay them in the future. Often, for a short time, a reduced payment plan is the better solution, as you’ll continue to pay off the balance of your Hire Purchase finance and minimise your account arrears growing. We’ll stay in touch with you throughout the duration of your initial payment arrangement and, as you near the end of this period, we’ll work with you to discuss the available options if you don’t think you’ll manage to return back to your contractual payments. If you are with another financial provider these options will vary and we would encourage discussing these as early as possible if you believe you’ll struggle in the long-term.

In both cases, because your finances have been affected by the Coronavirus, Zopa won’t be reporting payment reduction or freeze arrangements to credit reference agencies (CRAs), including Experian, Equifax and TransUnion, for the duration of your initial arrangement. This means that your credit file won’t be impacted during this time. It’s important you understand that we will resume credit reporting once your initial arrangement has ended.

Whether you’re a Zopa customer or have a Hire Purchase agreement with another provider, we would always encourage you to consider all options available and discuss them directly with your provider. We recommend getting in contact before you think you will miss a payment. If you are a Zopa customer and contact us as early as possible, we will typically be able to provide you with more options to suit your needs and we will do all we can to minimise the impact on your credit file.

At Zopa, you can talk to our repayment team by calling 020 3770 5960.

Update: Following the latest update from the FCA, customers can request a Coronavirus payment arrangement until 31st October 2020. If you’re able to return to your regular repayment, or make partial payments, it’s best to do so. We’ll be contacting you to make sure that you’re aware of your options and to agree with you the next steps forward. Further payment arrangements will not be reported as missed payments to credit reference agencies for the duration of the arrangement. However, it’s important to know that, if you are seeking credit in the future, this isn’t the only consideration lenders look at when they determine whether to lend to you.

Am I protected in any other ways?

Alongside a payment plan or freeze, the FCA has also highlighted that motor finance companies should not repossess cars or end loan agreements for customers who need their car and are experiencing temporary financial difficulties due to the Coronavirus.

Financial providers have been told that they can’t unfairly alter contracts either, meaning that firms can’t use the temporary fall in car prices caused by the pandemic to change the balloon payment expected at the end of an agreement – this applies to customers that have a Personal Contract Purchase (PCP) or a Personal Contract Hire (PCH) agreement.

If you have a PCP agreement that’s coming to the end of its term and you would like to keep the car, financial providers should work with you to come to an appropriate solution. Solutions should be available for those who have been affected by the Coronavirus and do not have the funds to currently cover the agreed balloon payment. We would encourage anyone in this situation to speak directly to their provider about the options available. Whatever solution your provider can offer, the most important thing is that it doesn’t lead to an unfair outcome for you.

Zopa will be following all measures highlighted by the FCA that are relevant to our Hire Purchase agreements. These measures will be in place over the next three months for customers that have been impacted financially by the Coronavirus. The FCA will be reviewing its guidance over this time in light of the Coronavirus developments and may revise this guidance if appropriate. We’ll continue to keep customers updated on any changes we may make.

Update: If you’re still facing temporary payment difficulties as a result of the Coronavirus and need your vehicle, firms still shouldn’t repossess your car between now and 31st October, if you’ve agreed a Coronavirus payment agreement. If you have a PCP or PCH agreement, firms shouldn’t unfairly change your contract in anyway between now and 31stOctober 2020.

Next steps

Helping our customers through difficult times has always been our top priority, and never more so now.  We’re continually monitoring the situation closely to ensure we’re offering the best possible help we can.

We work closely with the following not-for-profit debt charities to make sure that our customers have access to good, impartial advice and support. They offer lots of helpful information if you’re worried about your finances.

National Debtline: Call 0808 808 4000 Monday to Friday 9am-8pm.

StepChange: Call 0800 138 1111, Monday to Friday 8am-8pm or Saturday 8am-4pm.

There is also general advice on Coronavirus and your finances available here

And helpful advice for small business owners here

We would encourage all our customers to keep following government guidance here as well.

In our 15 years we’ve seen a lot, including the 2007/8 recession. While this is an unexpected situation for everyone, we believe we have the experience, the tech and the people to adapt quickly and make the changes we need to continue to serve our customers through this uncertain period. If you have any questions for the team in relation to your finances during this difficult time, we are here to help. Please do not hesitate to contact us in the following ways:

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