I can’t a ord my car payments; what can I do?

IF YOU’VE BOUGHT a car on finance but can no longer afford the payments because you’ve been made redundant or seen a significant drop in your income, the first thing you should do is speak to your finance provider. It’s far better to be honest with them than to just default on payments, because this will affect your credit score and make it harder to get finance in the future. Some lenders will be happier to assist than others, but you might be offered a solution that allows you to keep the car. You might be able to take a threemonth payment holiday or extend the period of the loan to reduce the monthly payments. If you’d rather just hand the car back, this depends on the type of finance you have and where you are in the contract.

If your car is financed via a PCP deal or hire purchase, you can hand it back to the finance company if you’ve already paid off 50% of the loan, including any interest and fees. However, if you’ve yet to pay off 50% of the loan, you’ll have to make up the difference. And if you’ve paid off more than 50%, you won’t get that extra money back if you cancel the contract.

If you lease your car through a personal contract hire scheme, handing it back early is a lot more difficult. You can return the car, but you’ll probably have to pay back any remaining money you owe on the contract. So, if you still have a year left, the lender will expect a year’s worth of fees up front. In this instance, it’s better to contact the finance company and see what else you can arrange.

If you used a bank loan or credit card to buy your car and can’t afford the repayments, you might have to sell the car to cover the money you owe. However, it’s worth contacting the bank or credit card provider to see if they can help while you can’t afford the payments.