FAQ’s – Covid19 and vehicle finance

Help! How will coronavirus restrictions affect me and my current vehicle finance agreement?

Is your PCP agreement ending soon? Does your PCH contract finish in the coming months? If so, then you might well be concerned about the impact that the coronavirus restrictions will have on your ability to find a new deal, or whether the pandemic will have an effect on your choice of vehicle when it comes to your new agreement.

We’ve gathered together a few of the most common concerns we’ve found people are calling us about, and outlined a few helpful tips on what to do – though as everybody’s situation is different, do remember that if you give us a call, we can help you with more specific information about your options, so you can make a fully informed choice about your PCP deal or PCH contract going forward.

My PCP agreement is ending soon. I want to find a new PCP deal, but I can’t get to a dealership because of the Coronavirus restrictions. I’m worried the finance company will try and take the final payment from my bank account.

If your PCP deal is ending soon, and you want to replace your vehicle rather than pay the final payment, the best first step is to contact your finance company. Advise them that you will be handing the car back, and ask that they begin the inspection and collection process … they won’t be able to actually do this until the lockdown restrictions are lifted but because you have instructed them they won’t take the payment.

You might be worried about whether it will be possible to coordinate the collection of the vehicle from the PCP agreement that is ending, and the delivery of new one, because of government restrictions. Inspections and collections are currently postponed for the foreseeable future and once lifted there will naturally be a backlog to get through. Whilst most dealerships are closed you can still speak with us at TYSONCOOPER and we can advise on pricing … quotations and expected lead times [ as much as possible ] and also do all we can to coordinate as smooth a changeover as possible once restrictions are lifted.

This is a situation that is shifting day by day, and will depend on individual funder policy, so our best advice is to discuss this with your finance company to find out the best way forward. Different companies are likely to offer different solutions to the problem of making sure PCP deal changeovers are as smooth as possible, so don’t make assumptions based on anything you’ve heard or read about how this will work, your finance company is best placed to advise.
You might be tempted to make that final payment, and hang onto the car for a while, until life returns to normal. However, whether this is a good idea will depend on whether your final payment figure represents good value for the car right now. If it isn’t, then it’s an expensive way to proceed when there are other options

We can help you by advising on whether your final payment is a good deal for the car you have, and also by explaining the other possible ways forward – it’ll just take a few minutes, simply call our friendly team on 01473 372020 to make sure you’re fully in the know about your choices (and don’t worry, there’ll be no hard sell).

My PCH contract is due to end soon, and I’m supposed to get a new car, but it hasn’t arrived. What can I do?

If your new PCH contract is with the same finance company as your current lease agreement, then you can probably keep your current vehicle until your new one arrives – but it’s worth getting in touch with them and asking the question sooner rather than later. If not, you can still request an informal extension to your PCH contract. This would usually be for a period of between one and three months, but make sure you ask about the rate as it may increase. Be sure to have your current mileage to hand when you call your finance company, as it’s one of the things they will ask for.

If you are even more unsure of what might be happening to your personal circumstances in the coming months, then you can request a formal extension to your lease agreement. This would usually be for either six or 12 months, depending on the length and mileage of the original PCH contract. The leasing company will provide you with a quote for the extended period, and you simply sign the quote and send it back to confirm.

It’s worth bearing in mind that there are some restrictions to both informal and formal extensions. You can’t change the basic elements of the contract (by adding or removing maintenance, for example) and your account will need to be up to date (with no arrears).

Some intermediaries or leasing companies may make an administrative charge for extensions (£100 + VAT is a common amount); it’s worth asking at the outset, so there are no nasty surprises.

Will there be delivery delays or shortages of new cars when the coronavirus restrictions are lifted?

It is too early to predict the overall impact on vehicle stocks and lead times, but most car factories are currently closed for an unspecified period – we have had the news that some intend to re-start towards the end of April, but of course this is still subject to change.

Many manufacturers had good stocks ahead of the shutdown, but still if you need a new vehicle quickly, you might need to be a bit more open-minded about the make and model that can be sourced within that timescale. ‘Locally’ produced cars – those coming from factories in the UK and Europe – are likely to offer the shortest lead times for factory orders – but this is the case in any situation and not just in a post-coronavirus world.

Late used vehicles will be the solution for many, as the cars are readily available – but it’s worth bearing in mind that these may become more expensive (in relative terms) due to increasing demand for a fixed number of vehicles. If you’re not sure of whether a used car is good value or not, simply give us a call and we’ll be happy to give you the low-down on how it stacks up against new vehicles that are available (you might be surprised how much better value a new car can be!).

Can I get a payment holiday on my current finance agreement ?

Unlike mortgages, council tax and credit cards, there is no national scheme in place relating to vehicle finance agreements – but there is much government lobbying by the FCA and this situation may change.

Different finance companies are dealing this in different ways – and much will depend on the lender themselves and the type of agreement you have.

Each request is being dealt with on a case by case but we have heard anecdotedly of some successes.

Until there is a wider directive from government it is best to simply ask your finance provider – if you’re not sure of who to contact please feel free to contact and we will do our best to get the most appropriate contact.

From responses so far we are finding that customers are getting better responses from emails as there are significant queues on funder phone lines.

What happens to my mileage allowance on my contract as my car is likely to be sat idle for a couple of months ?

Most independent leasing companies allow for mileage amendments during the contract – this is usually after the first 12 months – before the final 6 months and will usually require a change of minimum 5000 miles over the entire contract.

There are also selected leasing companies that also provide such a service for personal contract hire – but not all – although  we expect more to facilitate as a result of the impact of Covid-19 on peoples ability to travel.

If you are within the above parameters it is worth waiting until we are at as near normal a state as possible to assess the true impact on your mileage due to the lockdown measures and beyond.

As yet manufacturer branded contract hire have yet to offer such variations to personal contract hire customers – but this may change so it is worth asking the question of them.

For PCP contracts the funder is unlikely to make any changes – with a lower mileage when the vehicle gets to the end of the contract the higher the value of the car and more likelihood of equity – the FCA are continuing to review and make recommendations so if this situations becomes clearer we will of course update this page.

If you are not sure of who funder is or how best to contact them please drop us a line … getintouch@tysoncooper.com and we will do our best to assist.