Credit holiday right becomes indefinite in Russia

The State Duma adopted in the second and third readings a law on the right of a borrower to issue credit holidays on a consumer loan.

The credit holiday mechanism for consumer loans was introduced in 2020 as a temporary measure to support citizens during the pandemic, recalled State Duma Chairman Vyacheslav Volodin. From January 1, 2024, this rule will be in effect continuously. Earlier, a similar decision was made concerning mortgage credit holidays.

“The law will protect the rights of citizens who find themselves in a difficult life situation, will allow the borrower to avoid bankruptcy, and the lender to reduce the risk of loan default. If a person falls ill, loses his job, and his average monthly income falls by more than 30%, he will be able not to pay a consumer loan for up to six months,” said Vyacheslav Volodin.

Information about credit holidays will be reflected in the credit history but will not worsen it.

As Bashinform News Agency clarified, the law provides for the right of borrowers - individuals who find themselves in a difficult life situation, to apply to the lender with a request to provide such holidays for up to six months at any time during the term of the consumer loan agreement.

The maximum amount of a consumer loan for which credit holidays can be provided will be determined by the government of the Russian Federation. Before this, the maximum loan amount that can be applied for deferred payments will be 1,600,000 rubles if a vehicle pledge secures the borrower's obligations and 450,000 for all others.

During the grace period, it is not allowed to charge a penalty or levy execution on the subject of collateral or against the borrower's guarantor. At the same time, interest will accrue on the borrower’s current debt during the grace period.