Changes to Personal Loan Terms Amid the COVID-19 Pandemic

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A wide range of measures has been introduced to help South Africans manage, and in many cases simply survive, the changes imposed on their everyday lives by the COVID-19 pandemic. That includes a R-500 billion support package for employees, the self-employed and the many businesses that are struggling.

But it’s not just the government that’s making changes to help people cope with the financial hardship caused by this unprecedented pandemic. Banks are allowing some homeowners to defer their mortgage payments, landlords are negotiating rental reductions with their tenants and even the consumer lender Wonga South Africa is making changes to the terms of its personal loan products

What changes are being made

Some South African lenders are making changes to their loan terms to make their products better suited to the uncertainty many borrowers now face. Wonga has reduced its maximum loan term from six months to three months to ensure its customers still have access to cash, but are not caught in a lengthy repayment term when their future remains so unclear.

It is also asking borrowers whose jobs have been affected by the COVID-19 outbreak to get in touch if they are struggling to make their repayments. Wonga promises to be sensitive to its customers’ circumstances and to work with each individual to try to reach a repayment arrangement.

Payment holidays offered by leading banks

Many leading banks in South Africa, such as ABSA and Standard Bank, are also adopting this flexible approach. They are offering repayment holidays on personal loans to borrowers who are struggling to repay their debts or meet their financial obligations.

Borrowers can apply for a 3-month payment window when no repayments need to be made on credit products ranging from home loans and personal loans to credit cards, student loans and vehicle loans. By providing this additional flexibility and changing the terms of consumer credit products, financial service providers are doing their bit to minimise the impact of COVID-19 and ease the financial burden on millions of South Africans.