Most households will at some point take out a personal loan, either to buy a car or go on holiday or clear a credit card bill. Whatever the reason the customer has a financial obligation to meet a regular payment and will suffer a negative credit rating if they miss payments.
Some lenders ask whether a Payment Waiver feature will increase the cost of their loan, the answer is: not necessarily. Within any loan rate charged the lender already has an amount allocated for acquisition, retention, arrears, bad debt, collections, legals, recovery, solvency profit and many other cost centres. Payment Waiver would certainly be another cost centre, but having Payment Waiver in place is expected to reduce the incidence of arrears, which in turn will have an impact on customer collection costs, legals, recovery and ultimately the cost of solvency.
In most instances the true cost of the Payment Waiver feature is negligible. The lender will also be expected to receive more new business because of the enhancement to their loan offering. With a Secured & Unsecured Payment Waiver feature we work with lenders to try and understand what events are most likely to cause a particular customer group to fail to meet their payments, and design a waiver feature to give comfort, peace of mind and essential breathing space to the customer whilst they get their finances under control.
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