Martin Lewis of MoneySavingExpert gave practical advice to anyone with a mortgage, credit card, auto financing and more.
Writing in his weekly newsletter, Martin said anyone in financial difficulty can request payment time off.
However, this should be done before October 31st.
Essentially, a payment holiday means you don’t need to pay off things like mortgages, overdrafts, credit cards, personal loans, and auto financing.
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The payment holiday lasts for three months and is a convenient way to reduce the strain on your finances.
It was introduced in the wake of the coronavirus pandemic, which has seen thousands of people lose their jobs or be put on leave.
Speaking about payment holidays, Martin stressed that “everyone should assess as soon as possible if they need it,” reports Echo of Liverpool
How to get a payment holiday
If you request a payment holiday before October 31, it will last three months.
If your finances are affected by Covid-19, you can request a payment holiday, which will prevent you from making repayments.
If you apply before the end of this month, you will almost automatically benefit from three months. Payment holidays are available on mortgages, overdrafts, credit cards, personal loans, insurance, auto financing, buy-now loans, pawn shops and pawn shops.
There is also one month of payment and an interest holiday for payday loans.
If you have already had two three-month holidays on the same product and you request another one on the same product, you will switch to the post October 31 diet.
As of November 1, there will be a change from one-time payment leave to “personalized support”, which will depend on your situation.
This could include payment holidays, reduced payments, lower interest, or a different product and the help will go on credit files, which will likely have a bigger impact on your ability to get future credit than the help. current proposed.
What are the consequences?
Martin emphasizes that you should only take payment leave if you really need it.
Even though it’s better than missing payments, there are still consequences.
Obviously, interest accumulates. The money guru said that many people mistakenly assume that interest is frozen if you take a payment holiday, but it isn’t.
Interest continues to accumulate and while you are not repaying it results in a higher balance and more interest will accumulate.
A payment holiday can also affect your ability to obtain future credit. Currently, these Covid-19 specific payment holidays are not on your credit report but, as MoneySavingExpert.com revealed in May, lenders can factor them into loan decisions after spotting it via application forms, Open Banking or your payment history.
But so far, once the payment holiday is over and you’ve made a few refunds, MSE.com hasn’t had too much of an impact.
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