What you need to know when your loan repayment deferral ends

What you need to know when your loan repayment deferral ends

Last updated: 28 September 2020

As many Australians who’ve been financially impacted by COVID-19 approach the end of their six month loan deferral, banks and other lenders have introduced the next stage of measures to help individuals get back on track with their repayments.

The Credit Savvy Team have compiled some information on the options that may be available to you at the end of your deferral period and what you might want to consider about a possible loan repayment deferral extension.


When your six month loan repayment deferral ends

According to the Australian Banking Association (ABA), if you’re in a position to restart paying your loan, then you’ll be required to do so at the end of your deferral period.

If you’re still experiencing financial difficulty, your lender may be able to help restructure your loan so you can start making repayments. This could include extending the length of the loan, converting to interest-only payments for a period of time or consolidating your debts.

If you’re unable to start paying your loan or restructure your loan, you may be eligible for an extra deferral period of up to four months.

CreditSmart’s infographic includes some common scenarios that may find useful in helping you understand how a payment pause or deferral choice could impact your credit report.


What you need to know about the repayment deferral extension

The further four month repayment deferral is granted on a case by case basis and is only available if you cannot afford to make your repayments right now, but you’ll be likely to if you received the additional time. During this term, you’ll be expected to work with your bank to find a solution to help you get back on track.

While the extra time may benefit some people, it’s important to understand and assess whether it’s a suitable option for you. An additional four month loan payment pause will likely increase the overall amount you owe, as interest will continue to accumulate during this period.

Speak to your bank or lender and discuss the details about the extended repayment arrangement so you can work out how you can get back on top of your repayments sooner.


Common FAQs

What does repayment deferral mean & how does it work?

A repayment deferral or pause on your loan means that you can temporarily stop making loan repayments for the duration agreed upon with your lender. During this time, interest will still accrue and will be added to the total balance of your loan – meaning the longer your deferral period, the more interest will accumulate.


What if I can’t make any repayments after both deferral periods?

If you can’t make a payment at the end of your six month deferral or your four month extension, your lender will assist you through their financial hardship program to work out the right long-term solution for you.


Would the four month deferral extension affect my credit score and credit report?

As long as you have agreed on a loan deferral arrangement with your lender, your credit score and your credit report won’t be impacted, provided that your repayments were up to date before your deferral period started. During your deferral period, your monthly repayment history on your credit report will show up as either ‘up to date’ or ‘no repayment information’ reported.

If you’re wondering how a repayment deferral could affect your credit score, we cover this in more detail in our article here.


Remember, if you’re in need of financial support due to COVID-19, contact your lender as soon as possible to discuss how they may be able to help you.

Want to learn more about COVID-19 and your finances? You can visit our COVID-19 and your finances series to get tips and support information to help you manage your finances during this difficult time.

Learn about COVID-19 & your finances