Relief measures to help you financially through the next three months
All four big banks have announced loan repayment relief for the next three months for consumers whose incomes are affected by the coronavirus and subsequent 21-day lockdown.
Delaying the repayment of your loan, will, however, ultimately mean you pay more in interest, so you should only use this measure if you are financially challenged.
The relief from First National Bank, Standard Bank, Absa and Nedbank applies from April 1 to June 30 and is only for vehicle finance, home loan, credit card and personal loan customers who are up to date with their repayments but need to free up cash flow in the next three months.
For all four banks, you need to apply for your repayments to be suspended or reduced for three months and your loan period will be extended by three months. The exception is Standard Bank lower-income clients who will get automatic relief.
Capitec has advised that it will handle credit stress queries on a case-by-case basis. Clients whose financial situation has been affected by the coronavirus crisis can contact Capitec on 0860 66 77 89. Beyond this each bank has announced different measures:
First National Bank
- FNB will offer reduced interest rates in line with the prime interest rate (8.75%), with some variations depending on your credit profile. Interest rates on your existing loan agreements will remain as is.
The bank will charge no administration fees for any relief granted.
- The bank can assist you to process claims for loss of income on your credit life insurance on FNB agreements.
- You can also apply for relief from your FNB life insurance premiums so that your life insurance cover does not lapse due to missed premium payments.
- FNB Connect customers will receive a 1GB free one-off data allocation on April 1.
- Fees on existing loans will continue, but fees on new loans will be waived for three months.
- For business owners, the bank also announced that businesses that are not trading qualify for a waiver of their rental fees on Speedpoint payment devices and for bridging finance.
FNB CEO Jacques Cilliers says about 45% of the bank’s customers have credit agreements both personally and in their businesses; and these solutions are expected to help 70%-80% of FNB’s loan book.
The bank is engaging with the regulators and authorities to see what it can do to help consumers who were already battling to meet their debt repayments before the Covid-19 lockdown.
“We are working on rolling out a phase two approach to assist the customers who are in financial distress. We are speaking to government to see what they can bring to the table, and what donor funds are available but that will take a bit more time,” Cilliers says.
- Standard Bank will automatically give you a three-month reprieve from repayments on your car finance, home loan, credit card and short-term loans if you earn R7,500 or less.
- The bank has also announced a suspension of debt repayments for full-time students with student loans at the bank, where zero interest will be charged for the three-month period.
- In addition, loan repayments for small businesses with an annual turnover under R20m will be suspended, however, interest charges will continue to accrue.
Funeka Montjane, CEO of personal and business banking at Standard Bank, says while the three-month reprieve on debt repayments will automatically be applied to lower-income earners, consumers in higher income brackets can also access this relief but must apply for it.
“Clients will have the choice of either paying increased repayments from July or extending the term of their loan agreements,” she says.
Montjane said on March 18 the bank had informed all its customers to contact it if they needed help. “Our debt care centre started seeing an unbelievable amount of feedback with up to 2,000 calls per hour and up to 5,000 mails per hour.”
The bank decided that fast-tracking relief for small businesses, students and those earning R7,500 and less was a no-brainer. Other clients can get into “the slow lane” but they will have to contact the bank to request debt relief arrangements, she says.
In addition to offering three-month relief from repayments, Absa said small- and medium enterprises such as hairdressers, pharmacies, florists and coffee shops that rent premises on Absa campuses have been granted a three-month rental holiday.
Group CEO Daniel Mminele urged customers who can continue making their loan repayments, to do so. “This will enable us to extend these measures to many more who are not in a similar position,” he says.
In addition to the reduction or suspension of repayments, Nedbank says affected customers can apply for:
- A rearrangement of the current monthly repayment schedule, which may result in an increase of the original loan term.
- A withdrawal from any investment funds with Nedbank or Nedbank Investments without any penalty charges, up to a maximum penalty charge of R200,000. For example, if you have a fixed deposit account, you will be able to access your savings in that account without any penalty fees.
- The minimum repayments on all credit cards have been reduced to 2.5% from 5%.
Ciko Thomas, managing executive of Nedbank retail and business banking, says you must maintain your insurance premiums. In some cases, insurance premiums could be capitalised onto the loan amount, thus covering the loan, he says.
The Banking Association SA (Basa) says that the banks will collectively waive all Saswitch fees so you can withdraw cash from any bank ATM, regardless of where you bank. In some cases, this may not be implemented immediately, but fees charged in the next few days will be refunded, Basa says.
Do you get paid during the lockdown period?
Only those providing essential services can continue working during the lockdown — these include supermarkets, fuel stations and those in financial services. Where employees can work from home, they are encouraged to do so and, in those instances, they will receive their full salaries.
However, the biggest impact is on stores providing non-essential services including retail clothing stores, hotels, airlines, and small businesses such as hairdressers, beauticians, car wash services and estate agents — all of whom face either reduced or no income.
Some employers are continuing to pay salaries during the 21-day lockdown period while others have adopted a no-work, no-pay principle.
According to law firm, Webber Wentzel, a government-imposed lockdown or quarantine can be construed as a force majeure or a circumstance where your employer is unable to fulfil its obligations and is then able to implement a no work-no pay principle.