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Our Payment Deferrals explained
In accordance with Financial Conduct Authority (FCA) guidance, applications for new Payment Deferrals closed on 31 March 2021.
However, if customers have an active Payment Deferral in place they can extend their deferral further, up to a maximum of six months in total or until 31 July 2021 (whichever comes first).
If customers have resumed their monthly repayments after a Payment Deferral, they cannot apply for a further deferral.
If you are in financial difficulties and do not currently have an active Payment Deferral in place which can be extended: Please contact us on 0370 5050 123 to discuss your circumstances and how we may be able to support you.
We recognise you may be facing uncertainty at this time and that it may be difficult for you to make long-term decisions in these circumstances. Please do not let this prevent you from contacting us. We can talk with you about the possibilities for a short-term arrangement to give you more time or until your financial outlook becomes clearer.
If you are still in an active Payment Deferral and you would like to extend your deferral - up to a maximum of six months in total and ending by 31 July 2021 (whichever comes first): Please call us on 0370 5050 123 at least five working days before your next monthly payment becomes due.
Please read the information below about payment deferrals before calling us.
Please note in particular:
- Some of the features of a Payment Deferral of 4, 5 or 6 months are different to a payment deferral of 1, 2 or 3 months. Before applying to extend a deferral it is important that you are aware of these important differences.
- A Payment Deferral will increase your overall debt as it will take you longer to repay the amount borrowed. Whilst we will not report a worsening status to your credit file in respect of any payment deferral taken, it may still affect our and other lenders’ future lending decisions. We and other lenders may take into account other information resulting from a deferral when making future lending decisions to ensure a suitable affordability assessment is made, e.g. information provided by applicants or bank account information.
It is therefore not in your best interests to apply for an extension to your Payment Deferral unless you need this support due to temporary financial difficulties resulting from the impacts of COVID-19.
Free, impartial debt advice and money guidance is available to help you consider whether a Payment Deferral is right for you. Please see the section 'Debt help and money guidance' below for more information.
Payment Deferrals Explained:
These explanatory notes are for Select PCP (Personal Contract Purchase), Hire Purchase and Personal Loan agreements. If you have a Personal Contract Hire agreement, please call us for information about your deferral options on 0370 5050 123.
For more information on Payment Deferrals, your options and their implications please click here to view a video message from our MINI Financial Services Chief Executive Officer, Mike Dennett.
IMPORTANT NOTE: this video was recorded when the closure date for payment deferrals applications was 31 October 2020. This closure date has now been extended: for information on the new deadlines for payment deferral applications, please see above under ‘Deadline for applying for payment deferrals’. All other information in the video remains applicable. The maximum payment deferral period remains at six months.
HOW PAYMENT DEFERRALS WORK.
During a Payment Deferral you make no payments on your agreement. The length (or ‘term’) of your contract is extended by the same number of months.
After providing a deferral to you, we do not collect any payments on your finance agreement during the deferral period.
During a Payment Deferral period it is possible to make partial payments if you can afford to do so. It is likely to be in your interests to make voluntary payments at the level you can afford to limit the additional interest to pay, after payment of any arrears.
EXTENSION OF YOUR AGREEMENT.
The length (known as ‘term’) of your agreement is extended by the same number of months as your deferral period (up to six months in total).
Extending a finance agreement by the same number of months deferred means that the number of payments made in total remains the same.
You are, of course, able to continue using the vehicle during the Payment Deferral period and the extension to the term of the agreement.
ADDITIONAL INTEREST TO PAY.
As it will take longer to pay back the amount borrowed, there is additional interest to pay. This is calculated using the same rate stated on your finance agreement and will be spread across remaining monthly repayments, causing them to increase.
If you have a Select PCP agreement, an additional Payment Deferral will further delay the date of your Optional Final Payment by the number of monthly payments deferred. The interest charged for the deferral includes interest on this amount, because this will be outstanding for longer.
A Payment Deferral will therefore increase your overall debt.
HOW WILL THIS AFFECT MY OPTIONAL FINAL PAYMENT AND MILEAGE ALLOWANCE ON A PCP AGREEMENT?
If you have a Select Personal Contract Purchase (PCP) agreement, a Payment Deferral delays the date of your Optional Final Payment by the number of monthly payments that you defer.
Your car is therefore likely to be worth less at the end of the agreement. This may affect how you decide to exercise your choice of options available at the end of your PCP agreement. You still have the option to return the vehicle without paying the Optional Final Payment but please be aware that vehicle damage and excess mileage charges may be payable, as per your original contract.
For Payment Deferrals of up to three months in total (whether taken as one deferral or as more than one deferral adding up to three months in total):
- The amount of your Optional Final Payment will not change. However, the interest you are charged for the deferral period includes interest on this Optional Final Payment because this amount will be outstanding for longer.
- The mileage allowance (total contract mileage) in your agreement will not change. If you choose to return the vehicle at the end of the agreement you will be charged for any excess mileage over this allowance. The mileage allowance and excess mileage charge per mile is shown on your agreement.
For Payment Deferrals of four, five or six months in total:
- As the vehicle will be up to six months older at the end of the agreement, on any Payment Deferral that exceeds three months, there will also be an increase in your monthly payments for the anticipated depreciation in the value of the vehicle in the extended period over three months and the Optional Final Payment will be reduced. The Optional Final Payment is sometimes known as the Guaranteed Minimum Future Value (GMFV) and is payable if you choose to purchase the vehicle at the end of the agreement.
This depreciation will be calculated using the rate of depreciation set at the beginning of your agreement. It is not affected by any change to market conditions.
We have decided not to make this change for depreciation on initial Payment Deferrals of up to three months. This means that, also taking into account the additional interest, the impact on monthly payments is higher for deferrals exceeding three months than for deferrals of three months or less.
- On any deferral exceeding three months, we increase your total mileage allowance so that you are not charged extra for continued use of the vehicle during the extended period (up to six months in total), providing you do not exceed the new mileage allowance. The mileage allowance will be increased in proportion to the increased term of your agreement.
For example, if you have an agreement of 48 months with a contractual mileage of 40,000 miles, and we provide Payment Deferrals for a total of six months, your agreement will be extended to 54 months and your mileage allowance will be increased to 45,000 miles. This means you will not be charged excess mileage charges unless you exceed 45,000 miles.
Please remember that on an initial Payment Deferral of up to three months, the mileage allowance will not change. Please see the illustrations below to see how this can impact monthly payments.
THE FOLLOWING EXAMPLES ILLUSTRATE HOW THE ADDITIONAL INTEREST WILL AFFECT MONTHLY PAYMENTS AFTER A DEFERRAL OF THREE MONTHS:
These examples are based on an Original Contract Term of 48 months, 9.9% APR with a Payment Deferral Duration of three months, and a New Contract Term of 51 months:
The following examples illustrate how the additional interest and depreciation adjustment will affect monthly payments after a deferral of six months:
These examples below are based on a Payment Deferral Period of six months on an agreement with an Original Contract Term of 48 months, Original Contract Mileage of 40,000 miles, and 9.9% APR, which will result in a New Contract Term of 54 months and New Contract Mileage of 45,000 miles:
Important note: These are illustrations only. The impact on an individual agreement will depend on a number of factors, including the original amount of credit and contract term, APR, Payment Deferral period and the stage of the agreement at which the deferral is granted. For example, if a deferral is granted nearer to the end of an agreement, the increase in monthly payments is likely to be higher as there will be fewer monthly payments on which to spread the additional costs.
HOW CAN I SEE THE SPECIFIC IMPACT ON MY AGREEMENT?
After agreeing to a request for a Payment Deferral, we will email a ‘letter of concession’ detailing the additional interest on your agreement, your new monthly payments and, for deferrals over 3 months in total, your new Optional Final Payment and Total Contractual Mileage. If you have a query or decide not to proceed with your deferral you should call us as soon as possible.
HOW CAN I REDUCE THE ADDITIONAL INTEREST I HAVE TO PAY?
After being granted a Payment Deferral, you can make voluntary payments if you can afford to do so. This will reduce the interest charged for the deferral, after payment of any arrears incurred prior to the start of the deferral. You can make payments by calling us on 0370 5050 123.
WILL I HAVE ANY OTHER ADDITIONAL COSTS?
You will also need to pay for your car to remain taxed and insured with fully comprehensive car insurance during the extra month(s) that your agreement will run. You may also need to pay for an additional MOT or vehicle service if these fall due.
As the agreement will be extended, the vehicle is likely to be worth less at the end of the agreement. Please see above.
NOTICES WE MAY SUBSEQUENTLY SEND TO YOU
Due to the way a Payment Deferral is arranged, we are legally obliged to send statutory notices on a regular basis which will show your deferred payments as arrears.
These arrears notices are for information purposes only and to keep you up to date with the current status of your agreement. You will not need to take any further action in relation to deferred payments shown in this arrears notice as long as you adhere with the deferral arrangements. You may need to take action in relation to any other payments in arrears which are included in an arrears notice.
WILL MY CREDIT FILE BE NEGATIVELY AFFECTED?
Whilst we will not report a worsening status to your credit file in respect of any payment deferral taken, it may still affect our and other lenders’ future lending decisions as we and other lenders may take into account other information resulting from a deferral when making future lending decisions to ensure a suitable affordability assessment is made, e.g. information provided by applicants or bank account information.
We will also report any future arrears in the usual ways, so it is important that you consider the increased payments following a deferral.
WHAT IF I HAVE A PAYMENT DUE IN THE NEXT FEW DAYS?
If your monthly payment is due within the next five days, then due to direct debit and standing order arrangements, collection of this payment may still take place. In this case, the period of deferral that you have selected will start from the following month’s payment.
WHAT IF BEFORE I APPLY FOR MY DEFERRAL I AM ALREADY IN ARREARS AS A RESULT OF CIRCUMSTANCES RELATING TO CORONAVIRUS?
Your deferral will start from your next payment date and we will contact you to discuss the options available to you in relation to your arrears. Any arrears that you may have at the time of starting the deferral will still need to be repaid after your deferral period ends.
WHAT HAPPENS AT THE END OF MY PAYMENT DEFERRAL PERIOD?
We will contact you in good time before the end of your Payment Deferral period about your options.
Please see below under ‘Options at the end of your Payment Deferral’.
OTHER OPTIONS THAT MAY BE AVAILABLE TO YOU.
- You may have the right to voluntary terminate your agreement and return the vehicle. If you have an agreement regulated by the Consumer Credit Act (this is shown on the top of your agreement) and you no longer wish to keep the vehicle, you may wish to consider this option. In this case, you will have to pay any arrears, and pay for any vehicle damage and any excess mileage. If you have paid less than half of the Total Amount Payable under your agreement, you will also have to pay the difference between what you have paid and half of the Total Amount Payable. If you wish to discuss this option please call us.
- You can also postpone your payment by making a one-off movement of your payment date by a maximum of 20 days. This can be done online by logging into your MyMINI Finance account.
- You can settle the agreement by paying the settlement figure and then keep or sell the vehicle. A settlement figure can be obtained via our MyMINI Finance self-service facility.
- You can continue to make your usual monthly payments as normal. Please be aware that if you miss a payment without requesting a Payment Deferral, we will be obliged to report these arrears to credit reference agencies. If you have applied for a Payment Deferral before missing a payment and we have not been able to make the deferral arrangements in time because of operational difficulties as a result of Coronavirus, we will work to prevent this negatively impacting your credit file.
- You may wish to consider applying to enter into a new credit agreement to replace your existing agreement. This will be subject to underwriting checks. Whilst this may mean lower monthly payments than are due under your current agreement (if the duration of the new agreement is longer than the outstanding duration of your current agreement), please note:
- More interest will be payable and therefore the total amount payable will increase, and
- A new agreement will be subject to an affordability assessment and will only be suitable if you are confident you are able to afford your payment obligations under the new agreement without undue difficulty. It will not be suitable if you have arrears in addition to deferred payments, and
- You will have to pay more to voluntary terminate the new agreement (end the agreement early and return the vehicle) than to terminate your existing agreement.
Debt help and money guidance.
Free and impartial debt advice and money guidance is available at not-for-profit debt advice bodies. Please see:
the Money Advice Service’s Navigator Tool and Debt Advice Locator Tool, and the FCA information page ‘Dealing with financial difficulties during the coronavirus pandemic’.
If you are experiencing payment difficulties we strongly recommend that you access the help that you feel best suits your circumstances.
You can get guidance or not-for-profit debt advice through both digital and telephone services and, subject to local and national pandemic restrictions, face to face. See www.moneyadviceservice.org.uk for details.
If you are confident you are able to deal with your debts without the need for full debt advice:
- You may wish to work out a budget. Resources are available in the FCA information page mentioned above, and
- We would recommend you contact all your creditors to discuss your repayments. For most people it makes sense to pay essential expenses and priority debts before any discretionary expenses or non-priority debts. To see if this is right for you, you can use online guides such as the Money Advice Service ‘How to prioritise your debts’ page.
Customers in longer term difficulties or with health issues.
Payment Deferrals are intended to provide support to customers experiencing (or reasonably expecting to experience) temporary payment difficulties in circumstances resulting from the Coronavirus pandemic.
If you are experiencing payment difficulties which are not short-term resulting from the pandemic, or if you require additional support due to any health issues please call us to discuss the options available to you. We will take into account your individual circumstances in deciding how best to help you.
OPTIONS AT THE END OF YOUR PAYMENT DEFERRAL:
We will write to you in good time before the end of your Payment Deferral about your options. It is important you consider carefully whether:
- You are able to resume your monthly payments immediately, or
- You are unable to do so due to continuing circumstances arising out of Coronavirus.
For more information, please see:
IF YOU ARE ABLE TO RESUME YOUR FULL MONTHLY PAYMENTS AT THE END OF A DEFERRAL PERIOD.
If you are able to resume your full monthly payments (including the deferral interest and any depreciation adjustment) immediately and in full at the end of your current Payment Deferral, it is likely to be in your financial interests to do so. This will avoid having to pay additional costs incurred by deferring your payments further.
We will have provided you with information on your new monthly payments at the start of your Payment Deferral. We will write to you again before the end of your deferral period as a reminder of your revised monthly payment amount and date when your payments will resume, as well as information on your other options.
If you have cancelled your direct debit payment during the pandemic, please ensure you re-activate your direct debit in time for the first payment to be collected to prevent arrears arising. Please visit MyMINI Finance to reinstate this, allowing 10 working days before your next instalment is due.
If we do not hear from you before the first payment is due after your deferral period ends, whether by applying for an additional deferral on this website (see below) or by calling us to discuss the other options that may be available to you, we will proceed on the basis that you are able to resume full payments and will collect your first revised monthly payment.
It is important you contact us if you are not able to resume your payments. Please see below for more information.
IF YOU ARE NOT ABLE TO RESUME YOUR FULL MONTHLY PAYMENTS IMMEDIATELY AT THE END OF A DEFERRAL PERIOD.
If you remain in temporary payment difficulties due to Coronavirus at the end of a deferral period and are not able to resume your full monthly payments immediately, you will have different options depending on whether you have had the maximum six months deferred payments overall:
If you have already deferred six months payments:
You will not be entitled to apply for an additional payment deferral as the maximum available is 6 months overall and all payment deferrals must end by 31 July 2021. Please contact us to discuss your circumstances and other solutions available to support you.
We recognise you may be facing uncertainty at this time and that it may be difficult to make long term decisions in these circumstances. Please do not let this prevent you from contacting us. We can talk to you about the possibilities for a further short-term arrangement to give you more time or until your financial outlook becomes clearer.
If you have deferred fewer than six months payments:
If you are currently in a deferral period, you can apply to extend your deferral by up to a further three months, subject to the maximum six months in total and the end date of 31 July 2021 (whichever comes first).
You will need to apply in the last month of your deferral period and at least five working days before your monthly payments resume. This is important because if you apply after your monthly payment becomes due at end of a deferral, you will go into arrears and may lose your right to a further deferral.
Non-continuous payment deferrals: if you have been able to resume your monthly payments after a previous deferral and now have become in need of a further deferral, you cannot apply for a further Payment Deferral after 31 March 2021 under the FCA deferral guidance.
Payment Deferrals are intended to provide customers with further financial support in the exceptional circumstances arising out of the Coronavirus pandemic. If you are experiencing longer-term payment difficulties, please call us to discuss the options available to you.
For information on Payment Deferrals, your options and their implications please see the information above. You can also click here to view a video message from our Chief Executive Officer, Mike Dennett.
IMPORTANT NOTE: this video was recorded when the closure date for payment deferrals applications was 31 October 2020. This closure date was extended to 31 March 2021 and therefore the deadline for new payment deferral applications (in accordance with FCA guidance) has now passed. Only extensions to current payment deferrals are now permitted. The maximum payment deferral period remains at six months, except that all deferrals must end by 31 July 2021. All other information in the video remains applicable.
If you can afford to make partial payments, and wish to do so, you can apply to extend your Payment Deferral (up to a further three months and up to six months in total) and then call us to make voluntary payments at the level you can afford. It is likely to be in your interests to do so to limit the extra costs of an extended Payment Deferral, after payment of any arrears incurred prior to the start of the initial deferral.
Please remember an extended payment deferral will increase your overall debt and may affect future credit applications. It is therefore not in your best interests to apply for an extension to your Payment Deferral unless you need this support due to temporary financial difficulties resulting from the impacts of COVID-19. Please see the ‘Other options that may be available to you’ for information on alternative options.