With the UK Coronavirus Job Retention Scheme due to come to a close at the end of September 2021, you may be wondering if you can get a car loan while still in full time furlough.
Being on furlough means the UK government are paying up to 80% of your salary (up to £2,500 a month) through the job retention scheme introduced in March 2020 at the beginning of the Coronavirus Pandemic.
This furlough scheme was created to help companies keep on employees during the Covid-19 pandemic. Businesses could qualify for the scheme if they experienced a loss of earnings during the UK pandemic due to lockdowns and other related restrictions. This was designed to prevent nationwide unemployment and redundancies.
The Coronavirus Job Retention scheme has supported 11.6 million jobs up to May 2021.
When will furlough end?
The furlough scheme will remain open until the 30th of September 2021, however from the 1st of August the government will reduce the amount for furloughed hours to 60%.
Would being on furlough affect my credit score?
If you are on furlough, this fact does not show on your credit report. If you have had difficulty making your agreed repayments for existing credit commitments due to the pandemic, your lender would have been advised by The Financial Conduct Authority (FCA) to offer a payment holiday.
A payment holiday is a pause or delay in your monthly credit repayment to a lender. You will still have to pay additional interest built up over the months your repayments are paused.
If you agree an arranged payment holiday in advance from your lender, this will not show up on your credit report as a missed payment and will not negatively affect your credit history in the future.
Does being furloughed affect my car finance application?
If you apply for a car loan while you are in full time furlough, there is a perceived risk you may become redundant from your current employment. An ethical lender will always look at your affordability to safely make the monthly loan repayments during the agreed repayment period.
The lender should ask if you are on full time furlough before your application and could advise you to re-apply when you are back in full time employment.
Every lender has their own criteria and will have created additional rules, when it comes to an applicant being full time furloughed.
A lender may ask you to wait a few months until the furlough scheme has officially finished, or even to reapply in the future. Even if you are back in full time employment now, you may have to wait a few months to prove job or income stability again.
Can I apply for car finance now?
Go Car Credit are always transparent with our customers and have the latest application criteria on the first page of our online car finance form. This is to advise if we are accepting applicants in full time furlough to make an application with us.