Loan COVID-19 payment break

What you need to know before applying for a payment holiday and what happens next

Payment break applications are ending soon

You can apply for a payment break until 31 October 2020. Additional criteria applies to customers on existing payment breaks.

What is a payment break?

If you have a Tesco Bank Loan and have been affected by COVID-19, you can request a delay to your next three monthly payments.

Can I choose the length of my payment break?

We only offer payment breaks for a duration of three months, but you can still make payments towards your loan during this time. Read ‘Can I make payments during this time’ below to find out how.

When will my payment break start and what happens next?

When you’ve submitted the form we’ll take care of everything, including pausing your Direct Debit, so there’s no need to cancel it.

Where we can, we'll start your payment break from your next payment. If your payment is due within the next seven days, this payment will be taken and your break will start next month. ​

If you’re unable to make this month’s payment, it may be too late to stop your Direct Debit - so please call us now on 0345 300 4547.

If you’ve already missed more than one monthly payment, please get in touch now on 0345 300 4547 so we can discuss how best to support you

When and how are my delayed payments to be made?

Requesting a payment break means you'll still need to make these payments at a later date. Either by:

  • Paying off your delayed payments within your original loan term - if you do this no additional interest will be charged.

    You can make payments online with Faster Payments using your Tesco Bank Loan sort code and account number. Alternatively, you can call us to make a debit card payment on 0345 600 6016 . We’re unable to accept payments by credit card.

    If you choose early settlement on your loan or refinance, no additional interest will be charged.

    Please note, to avoid being charged three months additional interest, you must pay the total amount of your delayed payments within the original loan term.
  • Extending the term - this will happen automatically, additional interest will be charged

    If you’re unable to make up your delayed payments within your original loan term, we’ll extend your term to cover these and the additional interest.

    This means it could take you an additional four to six months to pay back your loan - three months to cover the payment break, plus an additional one to three months to cover the interest charged from extending your term. The interest charged will be dependent on your loan term and APR.

    Please note, the additional payments required to cover the interest will never exceed the normal monthly payment amount. If the interest due is more than the normal monthly payment, this will be split across a number of payments until the balance is repaid.

    Once your COVID-19 payment break has ended, we’ll send you a personalised breakdown of the interest and new repayments due.

    Here are some examples of how a payment break might look for a loan over 5 years:
loan-payment-break-table
Example 1 - £5,000 loan over 5 yearsExample 2 - £10,000 loan over 5 yearsExample 3 - £10,000 loan over 5 yearsExample 4 - £10,000 loan over 5 years
Loan balance - start of payment break£2,154£6,462£8,616£9,647
Loan balance excluding interest (the capital amount)£2,089£6,176£8,116£8,292
Annual interest rate3.00%3.00%3.00%7.90%
Effective monthly interest rate0.25%0.25%0.25%0.66%
Additional interest from 3 month payment break£16 (£2,089 x 0.25% x 3)£46 (£6,176 x 0.25% x 3)£61 (£8,116 x 0.25% x 3)£164 (£8,992 x 0.66% x 3)

For illustrative purposes only. 

The additional interest charged is calculated using the loan balance excluding interest at the start of the payment break. We multiply this amount by the effective monthly interest rate. This is then multiplied by three - the number of months in the payment break.

Will a payment break impact my credit file?

No, your COVID-19 payment break will not be reported as a missed payment to credit reference agencies. But bear in mind, though your credit file will not be directly impacted, lenders may look at other information – such as bank statements – when assessing credit applications.

You may receive letters from us notifying you of outstanding payments, for legal reasons we’re unable to stop these. Rest assured there is nothing you need to do about any ‘missed payments’ related specifically to your COVID-19 payment break.

Can I make payments during this time?

If you’d like to make payments towards your loan during your payment break, you still can - it could help you pay your loan off quicker. You can do this online with Faster Payments using your Tesco Bank Loan sort code and account number.

Alternatively, you can make debit card payments on 0345 600 6016 . We’re unable to accept payment by credit card.

Please note, to avoid being charged three months additional interest, you must pay the total amount of your delayed payments within the original loan term

What happens after my break?

You don’t need to do anything - we’ll just restart your Direct Debit and take the same monthly payment as before.

If you cancelled your Direct Debit, we’ll reinstate this so it resumes as normal.

If when your payment break comes to an end you still can’t make your payments, we have some options which could help. Visit our page on Further support for our Loans customers.

Remember you’ll still need to make your delayed payments, either by paying them off within your original term, or alternatively we will extend your loan term automatically to cover the delayed payment and the interest charged by extending your term.

Is a Loan COVID-19 payment break right for me?

If you can, take a moment to consider whether a payment holiday is the best option for you. Especially if you're not yet sure how COVID-19 will impact your finances, or if you're able to keep paying your loan for now.

Taking a payment break could mean it will take you longer to repay your balance so you may pay more overall for your borrowing.