Did you know that the COVID-19 Payment Break, facilitated by a separate credit agreement, charged at prime interest rate, can save you a considerable amount of money compared with a traditional payment holiday with extended terms?
Traditional payment holidays also give you a break from your repayments; you do not pay toward your loan during the payment holiday period and your payment terms are then extended. This means you end up paying your loan back over a longer period.
The 3 months during which you do not pay your instalments is added to your loan term and because interest and bank fees are still charged during the payment holiday period, you are charged ‘interest on interest’ and your monthly repayments on the existing agreement may increase.
However, when you take up the COVID-19 Payment Break:
- Your loan repayment terms will remain the same
- You can pay the amount separately after the payment break
- You pay zero fees on the new credit agreement
- You can settle it early with no penalties
- You will be charged prime interest rate on the amount; this is significantly lower than the interest rate for your original loan
- Repayment will only start once the 3-month period is over
The lower interest rate and zero fees on the payment break can result in significant savings for you vs. a payment holiday.