The COVID-19 crisis in Australia has been devastating for many people – on both the health front and in economic terms. With hundreds of thousands of businesses forced to close, millions of employees have been stood down or lost their jobs completely. The effects have been particularly hard in the travel, tourism, entertainment, hospitality, the arts and retail sectors.
While many will receive some income via the JobKeeper and JobSeeker programs, for most, this will mean a significant reduction in their usual earnings. With effectively no warning or notice that this was coming and no time to prepare financially, it has left many people in seriously precarious financial circumstances.
As a major finance broker in both consumer and business finance, we are well aware of the number of our customers that have car loans, boat loans, bike loans, caravan loans, truck finance and equipment finance contracts currently active, with repayments due on a monthly basis.
The global pandemic quickly became an economic pandemic for millions of Australians, looking for a way to meet their loan repayments. Seeking relief for this unprecedented event.
One of the first calls by governments was to appeal to the banks and lending sector for a broad-scale approach for relief to both business and consumer borrowers.
We have fielded many enquiries from our customers and have provided this overview of the process as an explainer of what your options may be.
- Jade Finance is accredited with all leading banks and many non-bank lenders and we have been in contact with updates from all in regard to loan deferments for both business and personal loans.
- There is essentially not a blanket or general statement that can be made concerning the type of support and level of relief being offered by all lenders, except that most are offering a 6 month deferral of loan payments on many loans for many customers.
- A 6 month deferral of loan repayments is available to many, but all requests are subject to individual circumstances.
- Deferring repayments is not an automatic process. You will need to apply to your lender directly.
- If you do not formally request a deferral and you fail to meet your repayment schedule, this is known as defaulting and may leave you at risk of action in repossessing the goods covered by the loan, by the lender.
- To assist their customers, all major banks and many lenders have already set up a dedicated website or web pages with information on their COVID-19 support policies. Links to this information and dedicated pages are clearly indicated on the company’s home page. We advise you access this information as your first step and immediately, if you require assistance.
- The ways to speak directly with your lender – phone numbers and email addresses – are displayed on their COVID-19 websites.
- Before considering a deferral, you should be fully informed of what this action means initially and further down the track of your loan term.
- A deferment is not a waiver. It does not exempt you from ever making those 6 months worth of payments. The repayments are not deleted for this period.
- The financial obligation still exists. Deferring payments means you put off the payment to be made at a later date.
- Effectively this extends your loan term by 6 months. For example, if you request a 6 month deferral from say your repayment due on 1 April 2020, you will be expected to resume monthly repayments on 1 October 2020.
- Interest on your loan will still accrue during the deferral period which may increase your final payment at the end of the loan term and for business finance, increase the balloon, residual or buyback.
- We have been advised by the relevant authorities, that due to these unprecedented circumstances, individuals and businesses that request and are granted a 6 month deferral, this won’t appear negatively on their credit report.
However, the longer term impacts are not as clear as to how lenders will consider a current 6 month deferral when considering future loans.
We always recommend that our customers to consult with their financial advisor for advice specific to their individual circumstances.
To discuss your finance requirements, contact us on 1300 000 008 to speak with a Jade Finance consultant.
DISCLAIMER:THE INFORMATION PROVIDED IS FOR GENERAL CONSIDERATION. ANY REFERENCE TO OFFICIAL GOVERNMENT POLICIES HAS BEEN SOURCED FROM AUSTRALIAN GOVERNMENT AND STATE GOVERNMENT SOURCES. NO LIABILITY IS ACCEPTED FOR ANY ERRORS IN PRESENTATION OR INTERPRETATION OF THE FACTS AS PROVIDED BY THESE SOURCES. WE ADVISE ALL INDIVIDUALS AND BUSINESSES TO REFER TO THEIR ACCOUNTANT OR FINANCIAL ADVISOR FOR PROFESSIONAL ADVICE SPECIFIC TO THEIR INDIVIDUAL CIRCUMSTANCES.