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Coronavirus: Freeze on pawn, payday and car loan payments

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People struggling with payday loans, car finance and pawn shop borrowing will be granted a payment holiday under plans by the City watchdog.

The Financial Conduct Authority (FCA) said the measures would help borrowers who are experiencing money problems amid the Covid-19 outbreak.

The FCA wants motor finance firms to grant a three-month freeze.

It is also asking firms specialising in rent-to-own, buy-now-pay-later and pawnbroking loans to delay repayments.

Those people with a payday loan will be given a one-month reprieve under the FCA’s plan.

Last week, the watchdog announced a three-month freeze on loan and credit card repayments.

“We are very aware of the continued struggle people are facing as a result of the pandemic,” said the FCA’s interim chief executive, Christopher Woolard.

“These measures build on the interventions we announced last week and will provide much-needed relief to consumers during these difficult times.”

The FCA will consult with finance firms and expects to finalise proposals by 24 April, “with them coming into force shortly afterwards”.

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