How to Configure a Payment Holiday
A payment holiday allows a borrower to pause either the principal, the interest, or both components of their repayment for a defined number of months. This is useful in scenarios like short-term hardship, onboarding promotions, or grace periods.
To do this, you simply create a new term that starts from the month you want the holiday to begin. In that term, set how many months to skip principal, interest, or both.
Add a New Term: Go to the contract page, click +New term, and select Payment holiday from the dropdown.
Select the Start Date: Choose the date when the payment holiday should begin. For example, if today is 10 December and the customer’s next regular payment date is 1 January, select 1 January as the start date of the payment holiday.
Define the Pause Duration: Now decide how many months to pause principal or interest repayments, and update the fields:
First principal payback period - number of months to skip principal payments.
First interest payback period - number of months to skip interest payments.
How Skipped Payments Are Handled
If interest payments are skipped, all accrued interest during the payment holiday period is added to the first interest invoice after the holiday ends.
If principal payments are skipped, the outstanding balance is amortised across the remaining payment periods after the holiday.
Examples:
Example 1: Pause principal for 1 month (pay interest only)
Start date: January 1st
First principal payback period: 1
First interest payback period: 0
Result: January will have no principal payment, but interest will be paid. Regular principal resumes in February.
Example 2: Pause both principal and interest for 2 months
Start date: January 1st
First principal payback period: 2
First interest payback period: 2
Result: No payments are made in January or February. All accrued interest during the payment holiday period is added to the first interest invoice after the holiday, and repayments resume in March.
Last updated