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If your income, job or business has been affected due to the COVID-19 pandemic and you need to buy some time to get yourself financially back on track, the offer of payment relief assistance is certainly welcome news.
This time around, the government’s latest PEMULIH aid package announced in July 2021 allows all individual borrowers and SMEs (including micro-entrepreneurs) to apply for a 6-month loan/financing moratorium or 50% reduction of monthly instalment for 6 months.
Unlike last year, it is not a blanket moratorium and all individual borrowers and business owners need to apply for it. However, under PEMULIH, all applications will be automatically approved.
Individual borrowers and businesses who can apply include:
- All individuals (whether you are B40, M40 or T20)
- All Small and Medium-sized Enterprises (SMEs) affected by the pandemic
- All microenterprises
Source: BNM
Even if you had previously applied for payment assistance or opted for the loan moratorium last year, you can still apply this time.
In addition to the standard payment relief packages, Alliance Bank also offers customised payment relief packages.
Here’s what is available under Alliance Bank’s Payment Relief Assistance
Alliance Bank has made available payment relief assistance (PRA) packages for both individuals and businesses.
For individuals, the bank is offering payment relief options to assist their customers who have trouble paying for their home, personal loan/financing and hire purchase monthly instalments.
Customers have the option to select the payment relief package they need and inform the bank. They can do this by:
- visiting the bank’s website to fill in an online form
- replying to the bank’s SMS text or WhatsApp message
- calling the hotline at 03-5516 9988 for assistance
However, just because you can get approved for the loan moratorium doesn’t mean you have to take it. If you are fortunate enough to keep your income in these trying times, there are other factors you should keep in mind.
What happens if you take the moratorium or lower your monthly instalments?
If you are really in need of financial breathing room right now, taking up a payment relief package is certainly a good option. However, it is important that you understand what it entails, especially after the six months is up.
Reducing or temporarily stopping your repayments will result in paying more in total loan/financing in the future due to additional interest/profit. You will also likely need a longer time to finish paying it since it is a larger amount compared to the original loan/financing you took out.
So, if you take the loan moratorium or reduced instalment, this will:
- free up your cash flow for the next 6 months
- not affect your CCRIS record
- not compound the interest or profit on your loans and financing (there will be no interest/profit rate charged on your loan/financing interest/profit rate)
- still incur monthly interest/profit on the loan/financing amount
- extend the term of your loan/financing or increase the amount you pay in monthly instalments later to cover the interest/profit rate charges from the six months
What can you expect after the six months is over?
As explained, your borrowing cost will increase the longer you take to pay off the loan/financing. For individuals and businesses, Alliance Bank offers several options for borrowers to manage their personal loan/ financing, hire purchase or mortgage.
If you choose to take up the payment relief assistance, there are two ways to continue repayment after six months:
- Step-up Instalment
- Start with lower monthly instalment.
- Pay a higher instalment in later months
- Additional interest/profit rate from the six months moratorium can be paid off faster (or calculated on the loan daily outstanding for a shorter period for mortages)
Who should take this up: Those who need to reduce instalment payments for a short term.
- Equal instalment
- Pay the same monthly instalment for the remaining loan/financing years
- Pay for the additional interest/profit rate spread over the remaining years (or pay for the additional interest/profit rate calculated based on the loan daily outstanding over a longer period)
Who should take this up: Those who want to reduce all their future monthly instalment payments until they finish repaying the entire amount owing.
For individuals who need advice on managing debts, please seek help from AKPK (Agensi Kaunseling dan Pengurusan Kredit). Likewise, businesses can contact the AKPK SME Help Desk for advice too.
Ultimately, do consider the pros and cons of taking up the payment relief assistance carefully before making a decision. Without a doubt, it can provide much-needed financial relief to those who have been impacted by the pandemic. However, if your income is not affected, it is better to continue repaying your loan/financing according to schedule.
