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Coronavirus: Car finance and ownership advice


As the UK goes into its first full week of lockdown in response to the coronavirus outbreak, households across the country are considering their budgets and finding ways to reduce their monthly outgoings. For many of us, paying for a vehicle – including car finance, servicing costs and insurance – is a significant financial outlay.

With this in mind, here are some of the options for drivers who might want to put the brakes on – even for a little while.

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I can’t afford to make my car finance payments – what should I do?

Contact your finance company as soon as possible to let them know. You’ll be able to find their contact information on your car finance agreement or on their website. If you can, read your agreement before you get in touch – it can really help to be familiar with the terms and conditions of your specific plan.

Your finance provider might offer to defer, freeze or extend your finance agreement. For example, considering the extenuating circumstances presented by the COVID-19 pandemic, Ford has introduced “special measures to help anyone leasing or financing their car through Ford Credit to offset the potential economic impact of the coronavirus outbreak.”

Volkswagen, on the other hand, has pledged measures that include “agreeing an affordable payment plan” and “offering breathing space for up to 60 days.”

Many finance companies are advising they’ll consider the circumstances on a case-by-case basis. When you do make contact, be ready to explain how you’ve been affected financially by Coronavirus. Remember: you’re still their customer, and they’re there to help you.

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Can I leave an existing car finance agreement?

Given the government announced that the UK population must stay at home, you might be thinking about terminating your car finance agreement entirely. Usually, whether you can or not depends on the type of finance agreement you have (HP, PCP or PCH finance) and how far into your agreement you are.

But at the moment, most car dealers have closed their doors in the wake of the coronavirus outbreak, so even if you are coming up to the end of your contract, you may struggle to physically hand your car back, as its condition will need to be assessed.

It’s more likely that you’ll be granted some flexibility on your contract end date and given the option of freezing your payments. Again, your finance provider will be best placed to advise you on this.

Here are some general guidelines on ending the different types of car finance contract, but it bears repeating that hugely reduced services will make it less likely that you can end any kind of contract at the moment:

  • Personal Contract Purchase (PCP)

With a Personal Contract Purchase (PCP) 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 finance company. Bear in mind 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.

  • Hire Purchase (HP)

The same goes for a Hire Purchase (HP) agreement – you’ll need to have paid off at least 50% or more of the total amount due. With this type of agreement, you’re more likely to be halfway through your agreement when you’re halfway through your contract, because rather than a balloon payment at the end, you pay a deposit at the outset.

  • Personal Contract Hire (PCH)

It isn’t as easy to cancel a Personal Contract Hire (PCH) agreement early; usually, the term is fixed. Check your finance documentation. You may have to pay off any outstanding costs in full to get out of your contract. However, if you speak to your finance provider directly, they may be able to offer you an extended lease to help lessen the outlay until you can get back to making your regular monthly payments.

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What if my car is due its MOT test during lockdown?

There’s no need to arrange your MOT test for now. The UK government has granted a six-month exemption from the MOT test due to the coronavirus outbreak, effective from 30th March 2020. These measures have been introduced to make it as easy as possible for frontline workers and essential caregivers to travel.

But even though the law has been relaxed, you’re still responsible for keeping your vehicle in a safe and roadworthy condition. Garages and some manufacturer workshops and service centres will stay open to help with essential car repairs and maintenance, and it’s worth keeping in mind that many of them will be giving priority to frontline workers and NHS employees.

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Do I still need to get my car serviced?

Most finance agreements insist that you keep your car in good working order throughout the term of your contract. However, given the present circumstances, vehicle manufacturers are showing lenience.

Toyota UK says it intends to take a “flexible and sympathetic approach to any service schedule or warranty issues”, while in their Covid-19 update, Citroën has stated it’ll extend its service schedule by up to three months (or 1,800 miles).

This information will vary between manufacturers, so it’s always advisable to double-check your manufacturer’s website or contact your local service centre for advice.

How about my car insurance?

If you plan to stop driving throughout the entire period of isolation, some insurers offer the option of suspending your insurance. You should check your car insurance policy documents in the first instance to find out if this is possible. However, you’ll only be able to do this if you can store your car somewhere safe like a private garage or driveway.

Perhaps you’re just planning to drastically reduce the amount you drive? You may no longer need to use your car for a long commute, or only use your car for short trips to the supermarket? If so, you may be able to switch your insurance policy for a low-mileage option to reduce your premiums.

It’s important to note that although the Department of Transport has granted drivers exemption from the MOT test, you’ll still need to keep your insurance up to date if you’re planning to drive at all.


If you’re facing debt or concerned about your financial stability during the coronavirus outbreak, we’re here for you. You can speak to one of our expert advisors, completely free, on 0808 253 3301.

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