Long-term impact of a Payment Break
Since the start of the National Lockdown, many South Africans have been unable to earn an income. We understand that, during this difficult time, many of you may be worried about money. While we provide financial relief for African Bank customers in the form of Credit Life Insurance and a Payment Break, it is important to us that you know what you’re getting yourself into. In this blog, we’re going to break down the various elements of a Payment Break. By understanding the implications, you can make informed financial decisions, knowing how it will impact you long after the lockdown has been lifted.
What is a Payment Break?
If you think you'll struggle to make your monthly Loan payments, we can help by offering a Payment Break. This will enable you to skip your monthly credit instalment for a short period of time, without negatively impacting your credit score at credit bureaus or records of your payment behaviour. Instead of missing a payment and being in arrears, a payment break offers some breathing room for the short-term.
Who can get a payment break?
Payment breaks are available to selected customers who have a good paying record and who have demonstrated good paying behaviour. This break also applies to fixed instalment credit agreements, like a Personal Loan. It is not, however, available to African Bank Credit Card holders.
Loan customers who wish to take up a Payment Break should research all the facts before making a decision. While a Payment Break on a fixed instalment credit agreement may sound like the perfect lifeline, it’s important that you’re aware of the long-term impact.
Here’s 4 things you need to know about Payment Breaks:
- Taking a Payment Break during the term of the Personal Loan does not change your monthly instalment amount.
- The term of your Loan repayment is extended to cover fees and interest that will accrue during the Payment Break period.
- While you will have gained immediate financial relief, the Payment Break will add to the cost of your Loan in the long term.
- By opting for a Payment Break, you will not be penalised at the credit bureau for inconsistent payment behaviour.
If you are considering a Payment Break, we encourage you to explore all options. Credit Life Insurance is another option to consider, especially if you have been retrenched, or put on short time or compulsory unpaid leave. If you are under financial strain for other reasons, however, a Payment Break is worth considering.
Learn more about our Credit Life Insurance by clicking here.