Martin Lewis has claimed car insurance support for motorists will be extended until at least the end of October to ensure motorists are not caught out by the virus. He presumes car insurance payment holidays will be extended until October 31 in line with extensions being planned for those on car finance deals.
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However he has warned road users that it is ‘far best to avoid’ stopping their payments if they can.
This is because insurance firms loan you the amount and will charge interest on top which will lead to higher payments in the long run.
Speaking on This Morning, Mr Lewis said: “If you pay car or home insurance monthly, it’s actually a loan.
“They loan you the annual cost of the insurance and charge you interest on top (far best to avoid doing this if you can).
“I suspect in the future we’ll hear this is being extended until 31 Oct too.”
Currently the deadline on payment holidays is 18 August but with some motorists only just returning to work a further extension looks likely
The FCA has demanded firms offer customer payment holidays of a minimum of three months if they are struggling financially.
These holidays will freeze payments on your cover while not affecting the level of your cover meaning road users can save money for essentials.
But the added interest means they are only advisable for those in dire need to save money as your overall costs will rise.
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Mr Lewis said the payment holiday schemes should be offered to any drivers who are struggling to pay monthly premiums.
Alongside this, Mr Lewis says forms should “reassess” the level of cover and remove extras to bring down costs if it will help the customer.
This would be in line with recent guidance from the Financial Conduct Authority (FCA) which demanded firms do more for road users.
Mr Lewis said: “If you’re still struggling to pay monthly premiums, the insurer should look at offering a payment holiday or at least other help or forbearance.
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“They should also reassess the level of cover you need and remove unneeded extras to bring down the premium.”
Mr Lewis has also revealed that extra support for car finance customers could be ‘rubber stamped’ within weeks.
He said the new extension will come into effect in mid July and will see motorists offered support until October 2020.
This means road users can get a new three month payment holiday or request a further extension while not losing access to their vehicle.
The new policy will also mean firms cannot repossess vehicles for non-payment until at least 31 October 2020.
Speaking about the extra car finance supper, FCA interim Chief Executive Christopher Woolard said it was “vital” motorists received the assistance they needed.
He said: “It is vital that people facing temporary payment difficulties because of the impact of coronavirus get the assistance they need.
“For those who have already taken a payment freeze and can afford to start making payments, even partially, it is in their best interest to do so, but for those that need help it will be there.’
Martin Lewis is the Founder of MoneySavingExpert.com. To join the 13 million people who get his free Money Tips weekly email, go to www.moneysavingexpert.com/
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