Can you get loan relief and how does it work?

The Government of Sri Lanka has offered loan relief through Banks and Leasing companies. Central Bank has shared given instructions to banks on how can get it and what relief they get.

How does loan/ leasing relief work?

1. Loan or leasing payments are only delayed. You will have to pay them later.
2. Your monthly payments are delayed from between 2 and 6 months.
3. 3. You can find out your loan/ leasing relief period by some answering simple questions: (Bottom of Page)
4. The payments you delay should be paid at the end of the loan or lease period
   1. This means that period of repayment increases
   2. There may be small increases to the monthly payment because of interest.

The banks and leasing companies that allow you to delay payments will charge interest for the delay. This increased interest will be added to your monthly instalments.

How is interest charged usually?

Usually banks or leasing companies charge more interest at the start and more capital at the end.

Loans and Leases: Close to being completely paid

For old leases and loans, most of your interest is already paid. Therefore, the interest added could increase your monthly payment. This increase won’t be much because the period of the loan or lease is also increased.

If you enter into a new lease agreement, the cost could be high due to:

• stamp duty
• other charges.

How much did you get charged when first taking the lease? These charges are very low on personal loans.

Loans and Leases: Recently taken

For new leases and loans, taking the relief has only a small increase in monthly payment. Since the interest charged has not been collected yet, the increase to your monthly payment will be small.

How to make decide whether to apply for loan relief?

Cash flow is the answer. If your income has reduced and you feel that paying loans or leases will be difficult, then check how long the benefit will be.

Can manage to make your loan or leasing payments during this period?

If yes, it is best to continue without the relief. This is because it increases the total cost of the money you borrowed.

If your cash flow will not be enough then you should take the relief.

See the article about how to use loan/ lease relief to build up a cash saving.
https://blog.lankaloan.com/benefits-of-using-loan-leasing-relief-moratorium/

Many other countries such as India, Italy, United States of America are also giving loan relief.

Recently a similar relief system was offered to the Tourism industry after the Easter Sunday attacks. This was a blessing to the tourism industry to survive and reach 90% of arrivals by December 2019.