If you or your business has been impacted by COVID-19 & you have loans that you want temporary relief from, ensure that when you talk with your lender/bank that you request "COVID-19 Relief" rather than apply for "Financial Hardship."
It may seem like a small thing but I have been reliably informed that although the result appears the same (eg deferral of payments by say 6 months), an application under "Financial Hardship" impacts on your credit rating & thus restricts your ability to borrow in the future.
Please note that:
- interest deferred will be capitalised &fees will continue to be debited to the account (Google the effects of Compounding Interest);
- any current fixed rate period could be extended the same period that you get relief for at that fixed term rate;
- your loan term could be extended by the same period that you get relief for (or you could have higher repayments instead);
- direct debits may not be automatically switched off so make sure that you check separately
It is absolutely imperative that you read the fine print for any document that you need to agree to & totally understand the new terms.
This tip was provided by Mr Taxman, Adrian Raftery, author of 101 Ways to Save Money on Your Tax - Legally! 2019-2020 edition (Wiley, May 2019, AU$25.95). This information is of a general nature only and does not constitute professional advice. You must seek professional advice in relation to your particular circumstances before acting.