Payment Waiver is a relatively unique form of equitable protection for both the lender and borrower.
Waiver programmes are designed and structured to deliver on specific promises made by the lender. For example, the lender may agree, as part of the loan terms, to ’Waive’ the borrower’s repayments in the event of the borrower’s illness and temporary absence from work, or for loss of employment. Waiver programs have five distinct attributes;
- They are designed with the specific target lending segment in mind;
- There is validation that the targeted potential borrowers have a genuine protection need;
- The lender ensures that the Waiver being designed addresses these specific needs;
- The lender ensures that the proposed Waiver safeguards are transparent and fair;
- And, the lender ensures the potential borrowers know that they are receiving this benefit as a feature of the loan.
The lender agrees with the borrower that, subject to certain conditions, they will waive the loan repayments and will continue to waive them up to a maximum number of payments. For example, if a borrower becomes ill and cannot work for a period of time, the lender will ‘Waive’ loan repayments. This ensures that the borrower’s loan repayments are still met, but ‘Waived’ or funded by the lender, NOT the borrower, effectively doing precisely what the borrower would have done had they not been ill.
Payment waiver provides support to borrowers in times of need
With Payment Waiver the lender takes the lead to help protect their borrowers, by offering a loan product that reduces the financial stress should the borrower not be in a position to make repayments under agreed conditions.
Payment Waiver gives your customers the confidence they need to borrow and you the confidence to lend, knowing that safeguards are in place for certain eventualities.
Typically, when partners incorporate Payment Waiver into their loan offering, they do not pass on any additional cost to their customers. They see Waiver as substantially increasing the value and distinctiveness of their loan offering by providing their customers with peace of mind should they suffer a financial shock, from an unexpected loss of income. This improves loan attractiveness, customer satisfaction and retention, and enhances Brand value.