Managing your finance
Can You Pause Car Finance Payments?
Can you pause car finance payments? When a payment holiday is possible and what it costs.
You can sometimes pause car finance payments through a payment holiday, but only if your lender agrees — it's not an automatic right, and the paused interest is usually added to what you owe. Lenders are most likely to agree if you're in temporary financial difficulty.
A pause can give you breathing space, but it's not free: the finance keeps accruing interest. Here's when it's possible and what to weigh up.
Can you pause car finance payments?
You can pause payments only if your lender grants a payment holiday — there's no automatic right to one. Lenders consider it case by case, usually for short-term difficulty.
Under FCA rules, lenders must treat customers in financial difficulty fairly, which can include a payment holiday or reduced payments. Ask early, before you miss a payment, and explain your situation clearly.
How a payment holiday works
A payment holiday lets you skip or reduce payments for an agreed period, with the missed amount added back to your balance afterwards. Interest usually keeps building during the pause.
Because the finance still accrues interest, a pause typically means slightly higher payments later or a longer term. Get the terms in writing, and check how it changes your total on the settlement calculator.
What a pause costs you
Pausing payments adds interest and can extend your term, so you pay a little more overall — and it may show on your credit file. It's relief now in exchange for more later.
Ask the lender whether the holiday will be reported to credit reference agencies and how it affects your total. A formal, agreed pause is far better than simply missing payments — see what to do after a missed payment.
It's a deferral, not a discount
Alternatives to pausing payments
If the problem is long-term rather than a brief blip, lowering your payments or ending the agreement may serve you better than a short pause. A pause only delays the issue.
Look at lowering your payments for lasting options, or, if the car is no longer affordable, voluntary termination once you've paid 50% of the total.
Frequently asked
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