A payment holiday is a feature that modifies the loan payment schedule by postponing the next scheduled payment to a later date. Consequently, all subsequent payments are also rescheduled accordingly. For borrowers, opting for a payment holiday is preferable to missing a scheduled payment because it prevents the application of any past-due fees (regular interest will still apply).
The Payment Holiday window includes the following settings:
Buffer time period: A payment holiday can only be applied if the nearest due date is not closer to the current date than the specified number of “Buffer time period” days. This ensures that payment holidays are requested with sufficient notice.
Max shifting term: Defines the maximum number of days the next due date can be postponed. The next payment date cannot be shifted forward by more than the “Max shifting term” days, providing a limit on how far payments can be deferred.
Maximum allowed number of payment holidays for loan: This setting specifies the maximum number of payment holidays that can be granted for a single loan. It ensures that borrowers cannot indefinitely postpone their payments by limiting the total number of allowable payment holidays.
If enabled for the credit product, borrowers can request a payment holiday when they are unable to make a payment on time. Such requests require approval from a Back-office employee.
However, if a payment holiday is initiated by a Back-office employee, it is applied immediately without the need for additional approvals.
You can learn more in the Payment Holidays articles in the Managing actual and potential debt
section.