With many South Africans in dire financial straits due to our nationwide 21-day lockdown, a question that we've been asked multiple times is whether car payments can be deferred.
The short answer is yes. The major financial institutions such as WesBank, Absa, Nedbank (MFC), and Standard Bank have pledged to assist cash-strapped customers with a break in payments, but only under certain terms and conditions.
But, before you opt for this, you should bear in mind that you just end up paying more debt in the long run. And in most cases, clients will still be charged interest and bank charges.
Here's what local vehicle financiers are offering:
Absa will be assisting customers with a three-month payment holiday, but only those who enjoy good standing with the bank. In other words, if you've been skipping payments or you're under debt review, you probably do not quality. By now, you should probably have received a text message on your phone asking if you would like to opt in for this service. If you haven't, please contact ABSA directly to find out if you are eligible. Visit the
- Nedbank's Motor Finance Corporation have solutions in place to support clients all of their clients who are facing tough times, but applications are also subject to approval. Customers who finance their vehicles via MFC, should contact them sooner rather than later to find out what kind of relief will be offered.
- Standard Bank is also offering a three-month payment pause on personal account-related debt, including vehicle finance, but only if your account is not in arrears, and you earn less than R7500:
"Customers who are in financial distress and not included in the three-month installment relief offer, should contact the bank as soon as possible by email on debtcarecentre@standardbank.co.za, or call the bank."
Standard Bank has also announced that their clients are eligible for a 25% cashback on car insurance premiums. If the lockdown is extended, the client's cashback will be adjusted accordingly.
- WesBank recently released a statement pledging their assistance to customers who are suffering loss of income during these difficult times: "WesBank customers under financial distress due to the impact of COVID-19 can apply for a break in payments", the statement reads. You can . Please be advised that you will have to provide proof that you are unable to service your debt, and based on this information, WesBank will decide if you qualify for a payment holiday.
- Toyota Financial Services have also released a statement in which they offer assistance for struggling customers and businesses:
"We are pleased to announce that with effect from 1 April – 30 June 2020, we will implement measures to provide relief to individual and business customers whose financial stability has been impacted by COVID-19. Our interventions will assist customers who demonstrated sound banking behaviour, such as having honoured their repayments to Toyota Financial Services on a consistent basis prior to COVID-19. The type of relief and the implementation thereof will vary depending on the type of product that each customer holds. Interest and fees will continue to accumulate on outstanding balances, but no fees will be charged for any relief granted. Customers who have been impacted are welcome to please get into contact with us through their preferred channel to make the necessary arrangements."
But wait! Here's some good news: If you have credit insurance, it should cover you for loss of income of up to 12 months
If you took out a loan after *August 2017, when the government required mandatory credit life insurance to provide for loss of income, you should be eligible for debt cover. If your employer forces you to take unpaid leave, you also have a claim. (This only applies to persons who are permanently employed and whose income have stopped, not for people who are just eye-balls deep in debt. )
According to finance guru Maya Fisher French, the first thing you should do before applying for a payment holiday, is to contact your loan institution directly to find out if you have this credit insurance in place. Watch her video that went viral here.
If you look at your bank statements, you should also be able to see whether you are indeed paying for this privilege. If your credit insurance covers you, your immediate problems are solved without sabotaging your finances later. If you'd like to know more, also read her article namely How credit insurance can cover your debt.
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Source: mayaonmoney.co.za, moneyweb.co.za, businessinsider.co.za
*Certain banks such as Nedbank and Standard Bank are now extending cover retrospectively for clients who took out cover prior to 2017, in certain cases. Contact your bank or finance house for more details or take a good look at those bank statements.
