Extended payment breaks on personal loans, credit cards & motor finance

Extended payment breaks on personal loans, credit cards & motor finance


In early November, the Financial Conduct Authority (FCA) announced they were extending the current rules on payment breaks for personal loans, credit cards and motor finance agreements.

Under the previous rules, consumers who were struggling financially due to the pandemic, were able to request up to 6 months of breaks until 31 October 2020.

Recognising how the continuing disruption and increasing lockdown measures may further disrupt consumer finances, the FCA have now extended these measures so that, until 31 March 2021:

  • If you have not yet taken a payment break – you may be eligible for up to 2 payment deferrals for a maximum of 6 months.
  • If you are currently taking your first payment break – you may be eligible for a further deferral of 3 months, brining your total break to 6 months.
  • If you have taken an initial payment break and resumed normal payments – you may be eligible for a further deferral as long as your total deferral doesn’t exceed 6 months.
  • If you have taken a 6-month payment break already – you can speak to your lender who may be able to provide tailored, short term support based on your circumstances.

Before requesting a payment break, it is important you are aware of how this may affect you in the longer term. While the FCA have been clear that breaks will not show on credit files, there are other ways for future lenders to check if you have had a payment holiday. For example, lenders may ask to view your bank statements which would clearly show a deferral of payments.  This could impact on the ways in which you can borrow going forward.

It is also important to note that any tailored agreement reached directly with your lender may appear on your credit file, however this should be explained to you in advance.

While these measures will no doubt help many through this difficult period, for others the extension of breaks alone will not be enough to fix long term debt problems.   If you are struggling with your finances and can’t see an end to the issues you face, it is important that you contact an experienced adviser.  When you reach out to us, our team will clearly explain all the options available to you, empowering you to make an informed decision about your future.

To get in touch, call now on 0141 300 5656 or book a call-back below.

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