What is a payment holiday?

Payment holiday is an operation that changes the loan payment schedule, so that the next payment is shifted to a later date (and all the remaining payments are shifted accordingly).

For a borrower, it’s better to use a payment holiday than to miss a scheduled payment, as in this case, there is no no past due fee applied (regular interest applies).

If enabled, payment holiday can be requested by a borrower if, for whatever reason, they cannot perform the payment in time. In this case it must be approved by a Back-Office employee. If the payment holiday is initiated by a Back-Office employee it is applied immediately.

Affects of an Approved Payment Holiday

When a payment holiday is applied, it affects:

• Payment schedule: Due Dates of the First Open Installment and all following installment are shifted in compliance with the payment holiday term.

• Interest: Accrued interest is applied to the First Open Installment as stipulated by the interest rate defined for the loan. The interest is calculated for the period between the old and new Due Dates of the First Open Installment.
  Outstanding Interest is recalculated in compliance with the new loan duration

• Balance log: A new record is added to the Balance Log with the amount of interest applied and Description: “payment holiday Applied”.

• Loan statuses: All the statuses are updated in compliance with the new Due Dates.

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