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Changes in loan terms during the corona period
Credit card companies have formulated a new repayment plan following the economic crisis that has hit hundreds of thousands of loan takers.
However, the Bank of Israel warns that this is not a grant and the customer must carefully examine all the details before making a decision.
For how long is the deferral, and what does the person who is already late in repaying the loan do?
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Loans
Bank of Israel
Corona virus
credit
Dana Yarkatzi
Tuesday, October 20, 2020, 11:10 AM
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Credit companies recently announced an outline for deferring credit loan payments, after the Bank of Israel approved another extension to defer mortgages and loans to businesses.
The outline, which went into effect this month, is intended to address the hundreds of thousands of Israelis who have taken out loans in recent years and run into financial difficulties during the Corona period, which are reflected, among other things, in declining revenues and difficulty in repaying loans.
The outline comes against a background of stagnation in the balance of consumer credit.
In December, it stood at NIS 15 billion, but as of the end of June, the balance of consumer credit had hardly changed and even decreased slightly.
The balance of bank credit, on the other hand, decreased by NIS 300 million in the same period - from 2.7 billion to 2.36 billion - while in normal times it is in constant growth.
The Bank of Israel emphasized that this is not a grant, but a loan that will require repayment, and urged customers to find out all the details about the payment that will be required of them later.
How long can the refund be postponed, what are the experts' recommendations and how much will it cost?
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"Consider things in depth."
Queue for a bank in Tel Aviv (Photo: Reuven Castro)
What is the outline for deferring credit loans?
Any customer who has taken out a loan of one hundred thousand shekels or less will be able to request a postponement until the end of December for a period of three months, without the company's discretion.
In addition, at the Company's discretion, there is a possibility of an additional three-month deferral.
The credit companies will without any consideration reject the principal component of the loan - the initial amount taken - but will be able to decide on the deferral of interest payment.
Which businesses are eligible for a loan repayment deferral?
Deferral of a business loan will only be granted if the annual turnover is NIS 25 million or less and is affected as a result of the crisis, for a period of up to three months and at the Company's discretion.
Similar to the private sector, the deferral of the principal will be made automatically but the interest component will be determined according to the decision of the credit card company.
Until when is it allowed to defer loan repayments?
The outline allows for a three-month postponement of the repayment of loan payments on credit cards, and a postponement of an additional three months conditional on the companies' approval.
Urged customers to find out all the details before making a decision.
Bank of Israel in Jerusalem (Photo: Reuters)
What happens if you are already late in loan payments?
The Bank of Israel issued a letter in June asking banking systems to refrain from taking legal action during the Corona period in order to reach agreements with the credit companies.
Experts at the bank explain that those who have so far paid off the loan as a series will be able to enter into a consumer credit outline and automatically receive a rejection.
In contrast, customers who are behind in loan repayment will not receive an automatic deferral.
However, since the agreement is voluntary, the credit card companies will be able to agree to an exceptional request at their discretion.
What are the recommendations of Bank of Israel experts?
The head of the financial education department at the Supervisor of Banks, Ayalon Binyamin, explains that this is not a grant, and the client should examine the consequences of the rejection.
He stressed that this is a new loan, in which the cost must be weighed against the benefit.
The client must understand whether the loan deferral pays off for him in light of the financial situation he is in and the need to delay dealing with the cash flow difficulties he has encountered.
Benjamin advises customers to take advantage of the opportunity created to reach arrangements for the day after.
"It is impossible to defer loans forever. The goal is to reach an agreement with the bank, because it is impossible to know how long the crisis will last."
More on Walla!
NEWS
Deferring loan payments could deepen crisis: "It's a risk, not a gift"
To the full article
"This is neither a grant nor a gift."
Ayalon Binyamin
How much will it cost the customer?
The Bank of Israel explains that the cost to the customer is according to the terms of the loan he took, and the interest is according to the interest terms of the loan itself.
Cumulative additional amounts, compound interest, will be included in the payment of interest.
"There are three parameters that define the cost that the customer will pay for deferring interest. The monthly billing amount, the interest rate on the loan and the balance of the loan period. These three parameters are necessary for calculating the monthly billing amount. "It is already gaining interest anyway. It should be noted that according to the outline, many credit card companies will agree to defer only the payment of the principal," Benjamin explained.
"This is not a grant, not a gift that the customer receives, so you have to consider things in depth before making a decision. This is something that in the end the customer will have to repay, a loan has to pay. We call on customers to contact companies and get full disclosure of the economic price The monthly after the postponement - and how much they will have to pay at the end and make an informed decision, "he added.
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