Should I still pay my debt during the COVID-19 Virus outbreak?
With all of the calamity around the Corona virus many South African consumers are wondering what will happen to their debt.
Most financial institutions are offering free payment holidays to help people affected by the virus, including those who have lost their income. This will be of great help to South Africans but the concessions that are been offered should be seen as a last resort. Let me explain why.
At the time of writing no institution has provided concessions that let you off paying your debt. The concessions do allow you to skip up to three payments and generally there is no fee for allowing you to do this, but the normal interest and monthly admin fees do continue to run.
So what does this mean to you?
Let’s assume you are paying off a one million Rand bond. Each installment is about R16 500 plus a R60 admin fee. You decide to accept the offer which has been made to you by your bank and skip three payments . The bank will add additional payments to the end of your term. Let’s assume also that you had paid off five years of a twenty five year bond, leaving 240 monthly payments to still make.
The scary truth is that you will not be paying for an extra three months or even four or five months, but a whopping 32 months! That is over two and a half years longer than you expected, all for the sake of a three month payment holiday.
Many of us will have no choice but to take advantage of the financial institutions not so generous offer, but if you can maintain your debt payments it is really the best thing to do.
What if I am already struggling to make payments?
If you are already struggling to make payments then taking advantage of the payment holiday will not solve your problems either. 58-eight offer a professional service to help you to deal decisively with financial difficulties. We are mindful of the challenges that the virus presents and, as an online service, can still offer you the best possible personal service.