There is so much uncertainty throughout the world right now with the impact of COVID-19 pandemic. Central banks around the world, including the Reserve Bank of Australia (RBA), are rapidly taking action to help financially support people through the economic impact.
Major and second-tier banks have been announcing new measures to help customers who are struggling to make repayments during this difficult time. These new measures are changing and evolving daily as the impact of the pandemic continues.
The Council of Financial Regulators (CFR) – which includes, the RBA, Treasury, the Australian Prudential Regulation Authority (APRA), the Australian Securities and Investment Commission (ASIC) – issued a statement on the 16th March 2020. The CFR stressed that regulators are working closely with the federal government to help ensure that Australia’s financial markets “continue to operate effectively and that credit is available to households and business”.
The regulators stressed that the financial system is well equipped to manage the crisis, stating that the banking system is “well capitalised and is in a strong liquidity position”. You can read more about this here
On the 19th March 2020, the RBA cut the cash rate by another 0.25% to bring the cash rate to a historic low of 0.25%. The RBA will also provide at least $90 billion at 0.25% over 3 years to banks if they lend the cash to small and medium-sized businesses. The federal government will also provide $15 billion through the wholesale markets used by small banks and non-bank lenders. This will enable smaller lenders to continue to provide customers with competitive lending products.
Basically, the heavyweights in the industry are all working together to help us all get through this.
What banks and lenders are doing if you can’t make your loan repayments?
If you are struggling to make your loan repayments your lender can assist. You may also need to access savings you have locked in a term deposit. All lenders have hardship policies to assist their customers, this is something that has always been in place. Many banks and lenders are now reviewing and adjusting their policies to cater to the financial impact of COVID-19. Some examples of what could be available to you:
- * Deferring loan repayments – generally up to 3 months relief (from 20th March 2020 some lenders up to 6 months relief due to COVID-19)
- * Interest-only repayments for a short period of time
- * Waiving of fees and charges
- * Helping with debt consolidation
- * Waiving of penalties for early withdrawal of term deposit
- * Deferring upcoming credit card payments
- * Emergency credit card limit increases
- * Deferral of payments and extensions for equipment finance
- * Working capital assistance for businesses
- * Extend the term of your loan to reduce repayments*
- * Business loans – announced on Friday 20 March 2020, deferring loan repayments up to 6 months
How to get help from your Bank
The most important thing you must do first………contact your bank or lender. They will not know you are under financial stress unless you tell them, you need to start the process. You must apply for assistance. Before you make contact, have some information ready:
- * How has your situation changed e.g. recently unemployed, your business is directly impacted with reduced sales
- * What income do you currently receive – amount, frequency, type
- * What are your expenses (bills, rent, mortgage, transport, food, insurance etc)?
- * How much can you afford to pay
- * How and when you expect the situation to change, you may not know this yet.
All banks and lenders have their individual policies on what they offer in times of hardship and this is continually evolving with COVID-19 crisis. The examples I have given can change, to check what is available you need to check directly with your bank or lender. The Australian Banking Association has some great information that can assist via financial hardship link providing details of multiple lenders with their contact numbers, website and recent media releases regarding hardship.
Once an arrangement with your bank has been approved, you’ll need to make sure you meet your side of the agreement. If you can’t meet the terms of the new repayment plan, you should contact your bank as soon as possible to discuss the situation. Keep a record of all discussions with your bank. It is very important to keep talking to your bank.
If you are not sure who to contact, then please contact us here at Wyze Finance and we will assist in finding who you need to contact. If you obtained your finance originally with a finance broker, they also could assist you to contact the right people.
Some other useful links are:
If you want to apply for finance?
All lenders are still open for business! If you need finance to purchase a home, refinance your existing home loan, finance for a car or finance for your business – contact us at Wyze Finance.
This page provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. It does not constitute legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances. All loan applications are subject to lenders terms and conditions, and eligibility criteria. Lender fees and charges will apply.