Car Finance Payment Holiday

jemmac85

couple of questions regarding car finance payment holidays. My car finance is charging me a fee for using this. Its £110 and i will be expected to pay this at the end. is this normal??

secondly. My husbands car finance rang him yesterday to discuss repayment of this holiday. (hes been back to work 1 week)    Mine has extended my contract by 3 months. his company want his paid back either over 3 or 6 months beginning from October?!  meaning his monthly payments will be much higher?? From everything ive read up on these holidays are to be extended? not paid back 3 months later?  can he argue this? he wasnt told this when he took it out? 

Grumpy_chap

There is a cost of having the 3 months of no car payment as the finance continues to accrue interest over the period it has not been repaid so that additional has to be repaid.  With the car finance, especially for a PCP deal with a fixed end date, the same total amount has to be repaid over the term.  Is the £110 the interest, or some other fee?

Similar with your husband's deal, except the company are asking for the missed payment plus interest to be paid back in a shorter time period, which probably means cheaper over the term.

What type of car finance do you both have (lease, PCP, HP)?
What terms and payments do the agreements have?  Plus deposit and balloon payments.  
Is the total you will pay over the term the same?  Plus an in interest charge for the 3 months you made no payment.
What were you expecting to be the impact?  It is not realistic to expect to have 3 months of no payments and never have to make that missed payment back to the finance company.

mattyprice4004

It sounds like you believe the holiday was meant to mean no additional interest or charges, which isn't the case - unfortunately nothing in this life is free. 
The £110 fee is probably to cover the interest if you're in a fixed-price deal, which is fair enough. 
Asking to pay back the extra on his contract over 3 months seems harsh, but 6 months isn't too bad really. 

jemmac85

the £110 is a fee for using the payment holiday, not the interest. They said thats already included in my current monthly fee. its just a fee?! 

@Grumpy_chap  i never expected not to pay it back? not at all. i didnt even imply that i expected that to be the case. Im more than happy with my finance company extending my contract by 3 months plus paying the extra interest. however im unsure why im being charged £110 for using a payment holiday.  

Grumpy_chap

That's odd.  I understand that there is not meant to be a "fee" as such for the payment holiday.  Worth challenging.

Is your car finance a type that can simply have the term extended?  Not straight forward with PCP.