With the impacts of the COVID-19 pandemic and closure of businesses for an extended period, the government managed to convince the banking industry to allow a moratorium on loans, including hire-purchase (H-P) loans. For a 6-month period up to the end of September 2020, monthly instalments did not have to be paid and no penalty would be imposed.
However, this did not mean the 6 months of instalments were deducted; what the move was meant to do was to give some breathing space to those who had been affected by pay cuts or worse, loss of employment and faced difficulty making the monthly payments. They would, however, have to resume making payments from October and their loan tenure would be extended by 6 months. No additional interest would be charged.
Today, the Prime Minister announced that there will be a further 3-month extension provided on the moratorium, which takes it up to the end of December 2020. But before you breathe a sigh of relief, there’s a condition: the extension is for those who lost their job in 2020 and are still unemployed.
For others who have H-P loans, payments will have to commence in October although those who have financial difficulties can discuss with their respective banks on various solutions that are available. For example, they could extend the repayment period so that the instalments are lower.
For other types of loans besides H-P loans, there can be adjustments to the instalment amounts for those who continue to be employed. They will have to discuss with their banks to work out a revised schedule of payments. One bank offers a Repayment Assistance Programme with flexible repayment terms which includes reduced monthly instalment and extension of loan/ financing tenure.
To apply for the extended moratorium, you will need to get in touch with your bank and provide them with the relevant documents to show that you qualify for the extension. If you require a long period, it will be up to the bank to consider the request. The PM said that the banks have expressed a willingness to extend assistance to anyone who appeals.