Lloyd's Loan - Payment holiday

McFarTech

Guys. 
My Mrs has had her hours cut at work and has also been hit with a 20% payout. She decided that based on this she would ask Lloyds for a payment holiday. The cost of her loan = the same as her pay cut so it sort of balanced out. Now Lloyds agreed the payment holiday for 3 months. however here is the sting. her loan is £300 a month and she pays about £140'ish in interest. So Llyods are going to extend her loan end date by 3 months and then charge her £300 per month in extra interest. So at the end not only will it be extended by 3 months she will have a further £900 to pay. Now I get that the interest still needs to be paid back for them 3 months but surely it would be £420 not £900. It seems she is being massively penalised for needing a payment break. Just looking for some advice and if this is correct?  

yksi

Your calculations are wrong. You can't just add three lots of £140 together. That £420 doesn't get paid on time, so it will be racking up extra interest right until the end of her agreement which is why it balloons out to £900 - you can't expect to basically borrow £420 back off the bank and enjoy it interest-free for months/years.

The banks are not doing this for profit, that's their actual cost of giving you the holiday - while they let you skip three months, THEY have to pay their own lenders, out of their own pockets, and can only get that money back off you months/years later.

Some are offering a choice and may allow her to slightly increase her payments instead of adding three months, so she might wish to ask if this is an option.