Information from the FMA about the possibility to defer loan repayments

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Consumers and microenterprises may contact their bank and apply to defer loan repayment instalments in the case that they have suffered severe losses of income as a result of the COVID-19 pandemic. In the case of a deferment, loan repayment instalments are suspended for a period of 3 months. This approach allows the absorption of losses arising from COVID-19 and for the loan instalments to be repaid later

If you are a private person and have bought goods or made use of a service for private purposes, then in this context you are considered to be a consumer. If you have taken out a loan in the capacity as a consumer, then this loan is considered to be a consumer loan.

Examples of consumer loans:

If you have e.g. taken out a loan as a consumer, to buy electronic devices for private purposes, to buy furniture, or have taken out a mortgage to buy an apartment, a plot of land or a house, then this loan is considered a consumer loan.

In contrast, you are not a consumer, if you have bought goods or made use of a service for professional or commercial purposes. A loan taken out for this purpose is not considered as a consumer loan.

An enterprise is considered to be a microenterprise, where it employs less than 10 persons, and where its annual turnover or annual balance sheet total does not exceed EUR 2 million.

Two criteria must be fulfilled, so that the repayment of loan instalments that were due between 01 April 2020 and 30 June 2020 may be postponed:

  • The loan was taken out before 15 March 2020, and
  • Currently you have such a severe loss of income, e.g. due to short time working or unemployment, that your subsistence or also the subsistence of persons to whom you are required to make maintenance payments, would be threatened.

In this case you may arrange a new payment plan with your bank. Where it is not possible to agree on a new payment plan, then the instalments are instead tacked on to the end of the term of the loan. Other conditions in the loan agreement remain unchanged.

The deferment or suspension of loan instalments does not automatically apply! You must inform your bank that you wish to make use of the deferment. You must also demonstrate that you have suffered a loss of income due to the COVID-19 pandemic. The loan instalment for the month of April may already have been debited or collected. Please contact your bank about this!

In order to avoid direct social contacts, you may use your online banking or may send an e-mail to your bank. An application form / online form or a hotline number can frequently be found on your bank’s website.

No, leasing contracts are not covered legally. Leasing instalments as a rule must continue to be paid. However, the option exists to make a separate agreement with the leasing undertaking.
No, the legal deferment does not apply for such payments, and such payments must continue to be made, although it cannot be excluded that another contractual arrangement is reached with your bank. 

No, borrowers are free to choose whether they exercise this option, or continue with the repayment plan arranged at the outset. Where you do not wish to make use of this deferment, you do not need to inform your bank about this being the case, you will continue to service your loan as per usual.

If you continue to make payments, then the deferment shall be considered as not having been exercise.

The term “moratorium” means a deferment, i.e. the temporary suspension of loan instalments becoming due. That does not mean that the bank excuses you from paying these loan instalments and that you therefore are not required to pay them. It simply means that your obligation to pay, is suspended at the current time during the prevailing corona crisis situation. You are required to pay back these instalments at a later date. Your bank shall not be allowed to charge you any penalty interest over and above the agreed interest to be paid.

This is a legal moratorium, i.e. the legal suspension of the claims of the bank for repayment, the payment of interest or payment of a repayment instalment towards consumers as they become due for the duration of 3 months and applies to consumer credit agreements that were concluded prior to 15.03.2020. (Article 2 2nd Act on Supplementary Measures in the Judiciary in relation to COVID-19)

This is an assistance measure that is exclusively available for borrowers who are experiencing payment difficulties as a result of the CoViD-19 pandemic.