What’s the best way to get relief from car payments during COVID-19?
Some automakers are allowing customers to skip payments, which will be added to the end of your lease at no additional charge or penalty. Here's how to qualify. The post What’s the best way to get relief from car payments during COVID-19? appeared first on MoneySense.
Q. Is there a way to suspend my car payments during COVID-19?
A. During this time of financial difficulty for so many Canadians, automakers are offering payment holidays up to three months, in many cases with no strings attached and no extra interest.
Upon receipt of evidence that you suffered a financial setback due to a COVID-19 related business interruption or a health issue, the best automaker programs allow you to skip payments, which will be added to the end of your lease at no charge. A 48-month auto lease becomes a 51-month lease, with the three monthly (or six biweekly) payments that were postponed paid at the end. The lease retains the same payment, original mileage allowance and residual value it had originally. As most people have dramatically reduced their driving, going over-mileage despite the longer lease period is not a major concern.
The most progressive automakers, like Mazda and Hyundai, have stated that suspending payments in the current circumstances will not result in a communication to the credit reporting agencies. If you have already missed payments, Mazda will still consider your request, as long as you’re behind by less than one month. So, if you need to skip payments, it’s in your interest to contact your automaker as soon as possible.
The process for suspending finance payments is similar to the process for leasing, with up to three skipped monthly payments added to the end of the term, stretching an 84-month new car loan to 87 months before it is paid back. With the better customer-oriented plans, the additional cost of lien registration and deferred interest is covered 100% by the automaker or bank. However, not all automakers are equal and some may not apply the same policies across Canada, due to differing provincial legislation. (A spokesperson for Mitsubishi said the original termination date continues to apply for receipt of the skipped payments and that their extension is limited to two months.) Contact the Automobile Protection Association to see if help is available if you are facing large charges from your automaker.
Caution: If you are facing a large repair bill, or looking for financial relief for your current vehicle at a new car dealership, be aware that attempts may be made to shuttle you into a new vehicle deal, with no payments for six months. Not having to make payments until nearly Christmas could look very attractive right now, but it doesn’t make sense to take on a lot of additional debt if you don’t really need a new vehicle or are facing financial uncertainty.
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The post What’s the best way to get relief from car payments during COVID-19? appeared first on MoneySense.