As Scotland goes into another week of lockdown in response to the Coronavirus outbreak, households across Scotland are considering their Coronavirus budgets and finding ways to reduce their monthly outgoings.
For many of us, paying for a car including vehicle finance, car insurance, MOT & car servicing costs and insurance is a major financial outlay which most of us would also categorise as an essential outlay.
With this in mind, here are some of the options for drivers who might want to park their costs for a while.
Unaffordable Car Finance
Considering the unique circumstances presented by the Coronavirus situation, your vehicle finance lender may be able to offer a freeze, a deferment or an extension your financial agreement.
You should ensure that you contact your car finance company as soon as possible to let them know what your situation is. Most car finance companies will have updated their websites with their current Coronavirus information. Ford Credit has introduced special Coronavirus measures for anyone leasing their car through Ford Credit to offset the potential economic impact of the Covid-19 outbreak.
Alphera Financial Solutions are a car finance lender who is offering Coronavirus car finance breaks for example and Blue Motor Finance has said that they will review each payment holiday request on an individual basis. Volkswagen Financial Services have advised that they will offer ‘breathing space’ for up to 60 days.
Buying A Car During the Coronavirus Pandemic
It will be difficult to purchase another car from a showroom for obvious reasons. Arnold Clark have closed their forecourts but online dealers Motors.co.uk have said:
“Many dealerships and manufacturers are offering the ability to buy a car completely remotely. Simply browse the internet for a used car that you like, and then get in touch with the dealer to see if contactless purchasing is available. You may be able to do everything – get an around-car video, see potential finance deals and sign necessary paperwork – all without having to leave the house.
It can then be delivered to your home at a time that suits you. Delivery companies are also disinfecting cars by cleaning key surfaces to ensure to lower the possible chance of contamination.”
Autotrader wrote a feature on safely buying and selling a car during the Coronavirus outbreak. However, Autotrader was also keen to stress that if the delivery of a new car is non-essential, to consider waiting until lockdown measures are eased.
Cancelling Car Finance During Coronavirus
We’ve been advised to stay at home for an undetermined length of time. While the optimistic among us expected to be out of lockdown in the next couple of weeks, the pessimists among us think we’ll be in lockdown for a number of months. However, regardless of how long we’re under lockdown conditions, many of us may consider just handing back the cars and cancelling car finance arrangements.
HP – Hire Purchase
You’ll need to have paid off at least 50% or more of the total amount due.
With a hire purchase agreement, you’re more likely to be halfway through your agreement when you’re halfway through your contract because you most likely paid a deposit at the outset of the HP agreement.
PCP – Personal Contract Purchase
With a PCP financial agreement, you can cancel and hand the car back as soon as you’ve paid back 50% or more of the total amount due to the vehicle financing lender.
However, consider that this includes the balloon payment that you’re due to pay at the end of the contract. If you haven’t yet reached 50% repayment of the total due, you do have the option of paying the difference.
PCH – Personal Contract Hire
Usually, the terms are fixed making it more difficult to cancel a PCH finance agreement before the end of the term. In order to get out of your contract, you will need to pay any outstanding fees in full. If you do have a PCH agreement, you would be better off speaking to the lender and asking what solutions are in place for their customers.
If you have a Personal Contract Hire agreement, or indeed HP or PCP agreement and you’re worried about repaying your future payments. You can also keep up to date with industry developments by following the BVRLA website.
Car Servicing During Coronavirus
Most car finance agreements ask that you keep your car in good working order throughout the terms of your agreement, but this has been made more difficult during the Coronavirus crisis. You can check directly with your manufacturer what their level of support will be.
The most sensible solution being offered is to extend this by three months, or a set number of miles but make sure that you find out what the policy is, due to the ever-changing nature of Coronavirus lockdown restrictions.
Garages in Scotland and some manufacturer workshops and service centres will still stay open to help with essential vehicle maintenance and repairs, and many of those will be giving priority to frontline workers and NHS employees, worth bearing in mind if you’re a frontline worker.
MOT Servicing During Coronavirus
The Government has granted a six-month MOT Coronavirus exemption for vehicles that were due their MOT, effective from 30th March onwards.
However, while all the authorities involved are taking a more lenient view on this, you are still responsible for keeping your vehicle in a safe and roadworthy condition and must, therefore, apply your own judgement on whether it is safe for your own, and other drivers during the fight against Covid-19. Any callout from a mechanic will most likely risk that mechanic to the dangers of Coronavirus.
Car Insurance During Coronavirus
Some car insurers are offering their customers an option to suspend car insurance during Coronavirus. If you have missed a car insurance payment already, contact your insurer as soon as possible because, if you miss a payment and you don’t notify your insurance provider, they may cancel your policy, leaving you without valid insurance.
It’s a legal requirement for your vehicle to be insured, even if you’re not driving it, unless it is declared as ‘off the road’ with the DVLA. You can find more information on Statutory Off Road Notifications.
Also if you’re using your car for work purposes during the outbreak and you didn’t declare this when you took out the policy, check your policy is covered for work purposes as some providers such as esure.com have a limitation in their policy for Social Domestic and Pleasure restrictions.
Can You Keep A Car During A Trust Deed?
If you need a car, you can keep one during your Protected Trust Deed or Debt Arrangement Scheme whether you own the car outright, or it’s on car finance. Your reasonable need for a vehicle might be based upon your work requirements or commute It could relate to taking children to school or living remotely. This will remain true before, after, or during the Coronavirus outbreak and removing these reasons will not mean that your car will be removed as a result.
If you’re struggling with unaffordable debts you may be finding it difficult to cope already and with the current conditions, this may be causing you to worry further about how you will afford to repay your unsecured debt, don’t worry every year we help thousands of Scottish residents enjoy a debt free future.
To get started, call us on 0141 221 0999 or try our online Trust Deed Wizard tool.