Vehicle owners in Great Britain may be getting some additional financial relief due to the coronavirus pandemic: a three-month suspension of car payments.
The enormous economic fallout from the COVID-19 pandemic has sent the global economy into a freefall, prompting financial regulators in Great Britain to take a look at a new strategy to help cash-strapped consumers — a moratorium on car payments.
Britain’s financial watchdog has proposed a repayment freeze for millions of consumers with auto finance contracts, other goods bought on high-cost credit, and pawned belongings during the coronavirus pandemic, according to a report from Reuters.
Brexit or Great Britain’s departure from the European Union already put enormous pressure on the auto industry in United Kingdom even before the pandemic spread across the British Isles, killing more than 16,000 people, according to data collected by John Hopkins University in Baltimore, Maryland.
(European auto industry set to creak back into gear next week.)
The Financial Conduct Authority is considering implementing a plan to temporarily suspend car payments.
Britain extended a national lockdown on Thursday by a further three weeks to early May, with many businesses shut and millions of people furloughed or having to claim welfare as a deep and rapid recession beckons.
Like other countries, Great Britain is looking for ways to help its citizens through the economic crisis, which is now being compared to the onset of the Great Depression.
The Financial Conduct Authority (FCA) said on Friday it expects car-leasing firms to provide a three-month payment freeze to customers who are having short-term difficulties as a result of the coronavirus.
(Automakers pressed to reopen plants, but face major obstacles.)
“If customers are experiencing temporary financial difficulties due to coronavirus, firms should not take steps to end the agreement or repossess the vehicle,” the FCA said in a statement.
The recently implemented Brexit has already stressed automakers in the UK, the pandemic is only making things that much more difficult.
The Financial Conduct Authority said car leasing firms should not try to use temporary car price depreciation caused by the coronavirus outbreak to recalculate so-called balloon, or final, repayments under personal contract purchases used by millions of people to buy a car.
However, the British proposal for a moratorium on car payments was something of a surprise because it came the United Kingdom’s conservative government. Democrats in Congress have floated similar proposals in the U.S., but they have not gained traction yet.
(Pandemic will have “a permanent effect” on auto industry.)
Automakers, which are scrambling to shore up their finances as their cash flow evaporates, had no immediate response to the suggestions from British regulators.