What is a payment holiday and how does it work?
If you’re experiencing a temporary financial setback and you’re struggling to make your monthly loan repayments, a payment holiday might be worth considering.
Remember that this isn’t a long-term solution to your loan repayments but rather a temporary relief option.
Before making any decisions, it’s important to understand how each debt relief option works and how it may impact you further down the road.
Always speak to a financial advisor or registered financial professional before making decisions. You can visit our Debt Care Centre to weigh the different options available.
What is a payment holiday?
A payment holiday allows you to take a short break from your monthly loan repayment. This could be a break from the full monthly loan repayment or only having to pay part of the repayment amount.
With this option, you can pause your repayments for a period you and your loan provider agree on. Once this break ends, you’ll need to start making your monthly repayments again.
A payment holiday won’t get rid of or reduce your debt, but it does give you some time to get back on your feet after a temporary financial setback.
How do payment holidays work?
During a payment holiday, you won’t need to make payments toward your loan.
Keep in mind that during this debt relief period, certain fees and interest will still be incurred on your loan. This means that the overall loan amount you’ll have to repay will be higher.
When your payment holiday is over, your monthly repayment amount may also be higher. This is so that you can balance out the time payments on your loan weren’t made.
The duration of a payment holiday is usually 1 to 3 months, depending on your circumstances and if you qualify.
After this temporary pause, you’ll have to resume your monthly repayments.
This isn’t the only debt relief option available. You can also learn more about how term extensions, debt consolidation, and re-spread of arrears work.
If you are a Standard Bank customer, you can make use of our online application process and find out what debt relief option you qualify for.
Disclaimer: This article is solely intended for information. It does not constitute financial, tax or investment advice or recommendation. Please speak to a financial advisor or registered financial professional before making any financial decision(s).
Standard Bank, its subsidiaries or holding company, or any subsidiary of the holding company and all of its subsidiaries make no warranties or representations (implied or otherwise) as to the accuracy, completeness or fitness for purpose of the information provided in this article or that it is free from errors or omissions.
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