Saturday, May 2, 2020

Bayanihan Act: What You Need to Know About the Payment Extension of Your Bank Loans

The COVID 19 crisis halted the economic activity of the country. Many business establishments temporarily closed their shops because of the lockdown. Most people stay at home and consequently lost their regular income.

The majority of the Filipinos struggled to survive this pandemic.  It is even more challenging if they have monthly payments to make like paying for rent, utilities, credit cards, or housing loans. 


Now, here's the good news. Bank lenders can breathe a sigh of relief because loan payments, including payment of credit cards, are extended by another month. 

The provisions of Section 4(aa) of RA 11469 or the "Bayanihan to Heal As One Act". grants borrowers a 30-day grace period if the payment due date of their bill falls within the quarantine period, which is from March 15-April 30, 2020. 


How does this work? Let me illustrate in the following example. 



NEW MONTHLY PAYMENT AND DUE DATE 

  • Example: Client A availed a 5-year loan from ABC Bank, which is going to mature on April 25, 2024. He has a monthly amortization of 25, 000.00, with the P24,000.00 applied for the payment of the principal amount and the remaining P1,000.00 for the monthly interest.
  • Question: How much will Client A pay on the next due date?
  • Answer: Client A should pay P26,000.00, representing the principal payment of P24,000.00 and P2,000.00 for interest for April and May. ?The client pays the regular monthly amortization on the succeeding months. 
  • Question: What is the new due date of Client A? 
  • Answer: May 25, 2020. 
OPTIONAL INTEREST COMPUTATION 
  • Client A may opt to pay the extra interest (April) on a staggered basis based on the remaining maturity period of the loan. 
  • In our example above, the additional interest is computed as follows: 
  • Additional Monthly Interest = P1,000.00 / (4 years X 12 months) = P20.83
  • Monthly Payment Due = Principal + Monthly Interest + Additional Monthly Interest
  • Total Monthly Payment Due = P24,000.00 + P1,000.00 + P20.83 = P25,020.83
While banks are not strict in collecting the monthly amortization, this scheme works to their advantage. The extended credit term allows them to collect interest charges for the extra month. It is practical to pay the amount due as is to avoid the additional burden. 

Financial institutions that violate the Bayanihan to Heal as One Act shall be subject to the corresponding penalties under RA 11469 and other existing laws and regulations. The new law takes effect starting April 2, 2020.


43 comments:

  1. This is a very timely and useful article. Thanks for sharing!

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  2. I think this would be a sigh of relieve for people in this situation at a time like this.

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  3. Very informative, thank you for sharing! Sending positive vibes and strength to everyone who has been struggling in this time of crisis.

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  4. Yeah I heard about the extension of due date, but doesn't mean the interests will be adjusted to your benefits. I still prefer paying on time and not be comfortable on the extension.

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    1. If you can, it is best to pay on time rather than have your payment extended because you need to pay interest charges

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  5. This sounds really good for people residing over there.

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  6. Thanks to this wonderful tips many people they decide to get some loans because of this pandemic crisis and I'am one for them.

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  7. Such a t timely article. Although helpful, some of the suggestions don't apply to me because I don't have many banks loans.

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  8. This is a very timely and useful article. Thanks for sharing!

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  9. I wish they just pushed back and added 3 months on the latter part so that people can really breathe easier.

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  10. This could not have been a more timely article, so many are still struggling with the covid-10 corona-virus pandemic! Job loss, furloughs and so many other factors have many scraping the bottom of the barrel to make ends meet with their new found lower monthly budgets. Very well written and informative thank you for sharing!

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  11. Thanks for such a helpful post! So many things to think about when it comes to bank loans.

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  12. I agree with the others, even though it is a temporary relief.. most people need it.

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    1. Yes, most if not all need this payment scheme.

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  13. it's nice to hear that these banks are trying to make things easier for their customers who are struggling during these times. i just hope families pay off as much as possible now. I fear people will be startled/shocked when they see the grand total after all the bills start coming due.

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  14. Great article. Thanks for sharing.

    Your timing is just perfect.

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  15. Useful information in these times. In India too the banks have offered moratorium on loans which wokrs or some and does not for others.

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  16. Thanks for such a helpful post! So many things to think about when it comes to bank loans. You have some great advice in it.

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  17. I have to investigate how this works in Spain.

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  18. Thank you for sharing the facts. This may come in handy later. -LYNNDEE

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  19. This article is much beneficial for now a time... coz in this pandamic situation when everyone is in there homes then most of the people who are waiters, shopkeepers or those workmen who does labour are much effected...Therefore this article would be much helpful...thanks for sharing (World in Eyes)

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  20. Great information that people of Bayanihan would find helpful.

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  21. Thanks again! I came back to share this information with a friend. It may only be temporary relief but it is absolutely need to know information.

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  22. During this time, it's harder to pay loans since banks are closed. This informative post is such a great help!

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  23. While this is a good thing, it still really doesn't help because people stil need to pay. I wish they move it back by 3 months just to give people a breathing space.

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  24. So many people are losing jobs and struggling due to the pandemic. It is comforting for many to know that there are some sort of temporary relief to help them during this tough times.

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  25. These are very helpful information! We have to take care of our financial health as well.

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  26. It is a good thing that most countries in conjunction with banks are offering grace periods for loan payments. It is a tough time for many so any help is important.

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    1. Indeed. it is so timely because most people lost their jobs unprepared and are struggling with their finances.

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  27. Thanks for the info. Yes the temporary relief must always be balanced with the knowledge of that sneaky interest that doesn't usually disappear.

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  28. Wow this is super informative and interesting- thanks for sharing!

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  29. Thank you for this information. This is a great help especially in settling our finances when this lockdown is lifted.

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  30. Hello, will it extend the maturity date for a month too? Like for your example, the new maturity date should be May 25, 2024. AM I right?

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  31. Thanks for an informative article! This is really helpful especially for people struggling with bank loans :)

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  32. That's awesome for people. I wish my country did even half of that to help people

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  33. Yes the virus will most defnitely also have a repercussion on economy too

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  34. Realtime and useful article, here all microfinance and banks rescheduled the loan due to COVID-19. Few peoples prefer to pay timely but due to rescheduled they are following the new schedule. It sound good of many peoples. (World in Eyes)

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  35. This is really great information. Thanks for sharing this :)

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  36. Some banks have adjusted payment even in my country.
    But I'm glad that you've tackled what awaits their customers.

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  37. Very good to know. I'll be sure to pass this along.

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  38. This time is bringing crisis to everyone, all over the world. This post is really very helpful to all of us over here.

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  39. I wish it is same in my country. Although I would still prefer paying at the due date. I don't really like being in debt.

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  40. I don't have any bank loans, but I rang round all my utility companies to see if there was any way they could help me in these uncertain times, and they all did. I'm now paying lower amounts until things start going back to normal. It was definitely worth a shot!

    Louise x

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