Should you take a payment holiday from your debt?

You can take a break from your debt, much like the way you take a holiday. But this is not always advised, finds Angelique Ruzicka

If you’re struggling to make ends meet one month, have an unforeseen cost to deal with or if you simply want a break from your repayments on one or more credit agreements, it’s possible to do so. Usually, you can take a break from paying your debt for a period of one to three months, but they can be longer in certain instances.


You’re unlikely to get a payment holiday if you want to use the money to spend on a lavish holiday. They’re only, unfortunately, available in exceptional circumstances such as retrenchments, maternity leave or where you’re potentially covered with a lump sum payout from a life insurance or inheritance in the future.

Colin Morgan, co-founder at getWorth, says: “Finance providers sometimes understand that people hit unforeseen snags and if someone is unable to meet payments, they would prefer to assist before the more drastic steps become necessary. It is therefore possible to negotiate a payment holiday with them.”

In some cases, you could also get a payment holiday during introductory loan agreements.

“In the used car space, the standard financing institutions, for example WesBank, will quite commonly allow the equivalent of a one-month payment holiday. The person taking the finance can choose whether the first instalment gets taken off in the following month. It’s possible longer holidays exist, but they aren’t common practice,” adds Morgan.


According to MFC, a division of Nedbank, the option of paying your arrears at the end of your loan term is “subject to your payment history and can only be approved once”. So there’s no second payment holiday – do it once and that’s it. There’s also a chance it could impact on your credit report as it could show that you haven’t been paying off your debt regularly.

There may be better options than suspending your repayments though. You could, for instance, pay back your arrears over three months or pay it back in one lump sum.

When it comes to payment holidays though, MFC says: “Arrears in interest will be more than in the case of a three-month repayment option,” so this may not always be the best option when dealing with your debt.

What’s more, payment holidays can’t be relied upon.

Frans Joubert from Salary Management Services says: “Payment holidays can only be arranged at the instance where you borrowed the money in the first place, for example your bond or vehicle loans. It is, however, not compulsory for such an instance to grant the payment holiday.”

So, while a loan provider’s “skip a few payments” deal may sound like a good offering to free up some cash, it may cost you more in the long run.

To see if you qualify for a payment break you have to get in touch through your loan provider’s debt care centre.


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