More than 20 personal loan lenders are providing some much-needed breathing room for borrowers during COVID-19.
The two main forms of relief for personal loan borrowers are allowing a repayment holiday for three to six months and discounting personal loan interest rates.
For many who have lost their jobs or seen their income reduced because of the coronavirus, pausing repayments in the medium-term may take the immediate pressure off their backs.
As with any financial product, it’s important to read the fine print and in this case, there is a potential catch, namely interest capitalisation.
While repayments are essentially frozen during a repayment holiday, interest and fees are generally not and will continue to pile on top of on your loan balance.
When repayments eventually resume, you could owe more total interest and face a bigger repayment bill in the long run. This means your lender may either bump up your minimum repayments to ensure the loan can still be paid within its term, or they may extend your loan term to make up for the missing time.
For those who are considering freezing their personal loan repayments, it could be in your best interest to restart repayments as soon as you are in a better financial standing. If possible, even making lower repayments could be a good start.
Before making any decisions, it may be best to consult a financial adviser who can give you advice on your personal situation.
RateCity has compiled a list of the lenders which are either pausing personal loan repayments for those affected by the pandemic or cutting its personal loan interest rates.
Lenders freezing personal loan repayments
Some banks may have prerequisites in place for allowing borrowers to take a repayment holiday. For example, the bank may only consider a borrower’s application to pause repayments if their loan is on a variable rate and if they are ahead of their repayments.
Interest capitalisation is also likely to apply to repayment deferral periods.
Contact your lender to find out more about its specific criteria for granting repayment holidays, as well as any terms and conditions.
Australian Unity – Customers may pause personal loan repayments for up to six months.
Australian Military Bank – Borrowers may pause repayments for up to six months.
Auswide Bank – Option to defer repayments for up to six months.
Bank First – Personal loan customers requesting financial assistance may be able to defer their repayments for up to three months.
Bank of us – Customers can apply for a payment deferral of up to six months.
Bankstown City Unity Bank – Borrowers may be able to defer loan repayments for an initial three-month period with a further three months available if required.
BankVic – Impacted members may apply to defer repayments for a period of up to six months.
Circle Alliance Bank – Payment relief on loans and other credit facilities for up to six months.
Endeavour Mutual Bank and Sydney Mutual Bank – Deferral of loan repayments for up to six months (with a three month checkpoint) for members in need.
Firefighters Mutual Bank, Health Professionals Bank, Teachers Mutual Bank and UniBank – Customers can contact bank to see if eligible for a three-month deferral.
Gateway Bank – Borrowers may defer repayments for up to three months.
HSBC – Customers may defer personal loan repayments for up to six months.
ING Bank – A three to six-month payment pause on home loans and personal loans for those in need, subject to financial assessment.
MOVE Bank – Option to defer loan repayments for up to three months. Will also waive establishment fees and prioritise the processing of personal loans if borrower is in need of emergency funds with establishment fees waived.
MyState Bank – Borrowers may have the option of deferring their personal loan repayments for up to six months, with a three-month checkpoint.
Newcastle Permanent – Personal loan customers can request a pause in repayments for up to six months, including a three-month checkpoint.
People’s Choice CU – Members facing financial difficulties due to the impacts of the coronavirus may pause repayments for up to six months, with a review after three months.
Qudos Bank – Customers may pause their personal loan repayments for up to six months.
RACQ – Borrowers may defer repayments on personal loans.
Unity Bank – Borrowers needing financial assistance at this time may defer loan repayments for an initial three-month period with a further three months available if required.
Warwick Credit Union – Personal loan customers can request support by way of deferring repayments for up to six months.
Lenders discounting personal loan rates
Some lenders have implemented different COVID-19 support measures which focus on helping people who may need extra funds to pay for rent and other living expenses during these tough times. Here are the lenders which have provided some form of discount to their personal loan rates.
Bendigo Adelaide Bank – Discounted interest rates on new personal loans taken out by existing Bendigo Bank customers.
G&C Mutual Bank – Borrowers can receive a 1.00% discount on their normal eligible Fair Rate Loan Tier in the next six months. No repayments required for the loan’s first three months.
Heritage Bank – Cutting personal loan rates by 0.25%, effective April 1.
Hume Bank – New unsecured personal loans will be made available to eligible customers at secured interest rates. – effective April 1.
IMB Bank – Personal line of credit interest rate reduced by 1.00% for new and existing customers – effective April 3.
Nova Alliance Bank – Discounted interest rates on new personal loans taken out by existing Nova Members.
QBANK – Car loans approved after March 27 will have its interest rate reduced by 0.50% per annum.
Qudos Bank – Automatically reducing existing customers’ variable personal loan and car loan rates by 0.10% per annum. New customers can also qualify for a rate discount of up to 0.10%. Application fees for personal loans will also be waved – effective April 2.
Service One Alliance – Discounted interest rates on new personal loans taken out by existing Service One members.