Split requests by why the customer is asking. If the loan terms include a payment holiday and the customer meets the conditions, the agent can grant it, after showing the extra interest and getting informed confirmation. If the customer is asking because they cannot pay, it is a forbearance request, and a named person decides it.
What is the process, and who owns it?
A payment holiday pauses or reduces loan repayments for a set period. Interest usually keeps accruing and is added to the balance, so the total cost of the loan rises and later payments or the term increase. Some products include holidays as a feature: after a number of on-time payments, the borrower may take one, no questions asked. Others offer them only as forbearance to borrowers in difficulty.
The two look alike from the customer's side and are very different for the lender. A contractual holiday is an entitlement with set conditions. A forbearance holiday is a judgement about a customer in difficulty, with consequences for how the loan is classified and reported. The head of lending operations owns contractual holidays; the financial support team owns forbearance. The general answer on whether agents should agree either is in whether an AI agent can agree a payment holiday or forbearance plan. For the wider frame, see our guide to AI agents in banking.
What are the steps, and who acts at each one?
- Agent, depth 1: authenticates the customer and reads the loan. Product terms, payment history, any previous holidays, arrears, flags. Evidence: facts used, with sources.
- Agent, depth 1: asks why. A short, neutral question. If the answer indicates difficulty, such as job loss, illness or other debts, the case moves to step 7. Evidence: the customer's answer.
- Agent, depth 1: checks contractual eligibility. Holiday allowed by the terms, payments made on time for the required period, no holiday taken in the restricted window, loan not in arrears. Evidence: eligibility result per condition.
- Agent, depth 2: shows the cost. Extra interest in an amount, the new monthly payment or term afterwards, and how the holiday will appear on the customer's record. Evidence: the illustration shown.
- Agent, depth 1: confirms understanding. The customer confirms they have seen the cost and still want the holiday. Evidence: confirmation recorded.
- Agent, depth 3: applies the contractual holiday. It updates the schedule in the servicing system and sends written confirmation. Evidence: schedule change and letter.
- Person, financial support specialist: handles hardship requests. With an income and expenditure assessment, considering a holiday alongside other options. Evidence: assessment and decision.
- Agent, depth 2: prepares the end-of-holiday contact. Before payments resume, a reminder of the new amount and an offer of help if things have not improved. Evidence: message scheduled.
| Step | The agent does | Depth | Stays with a person |
|---|---|---|---|
| Read loan | Gathers terms, history, flags | 1 | Nothing |
| Ask why | Screens for difficulty | 1 | Hardship cases go to step 7 |
| Eligibility | Tests each contractual condition | 1 | Nothing |
| Show cost | Illustrates extra interest and new schedule | 2 | Nothing |
| Confirm | Records informed confirmation | 1 | Nothing |
| Apply | Grants a contractual holiday | 3 | Holidays outside the terms |
| Hardship | Prepares the case | 2 | Specialist decides |
| Resume | Drafts the end-of-holiday message | 2 | Nothing |
Which controls matter, and what evidence do they leave?
Eligibility as bounds. The contract's conditions are configuration checked when the holiday is applied. Evidence: verdict citing each condition.
Cost before consent. The holiday cannot be applied until the illustration has been shown and confirmation recorded. Evidence: timestamps in that order.
Collection paused to match. The direct debit or other collection must skip the holiday months, or the lender collects anyway. Evidence: collection schedule changed alongside the loan schedule.
Hardship never handled as a feature. A customer in difficulty who meets contractual conditions should still be offered support, not just processed. Evidence: screening result on every request.
Arrears exclude the agent. A loan already in arrears is a collections and support matter. Evidence: refused verdicts on loans in arrears.
No status changes. The agent never marks a loan as forborne or defaulted; those classifications carry reporting and accounting effects. The reasons are set out in whether an AI agent can mark a loan as in default. Evidence: refused verdicts on attempts.
What should you measure?
- Contractual holidays granted, and customers who resume payments on time afterwards.
- Customers who fall into arrears within a few months of a holiday. A rising number suggests holidays are going to people who needed support.
- Hardship cases routed at step 2, compared with how many later reach collections without having been routed.
- Sampled conversations where the cost was not clearly shown.
- Complaints about the cost of holidays.
Where does it usually go wrong?
The cost is buried. Customers take a holiday believing it is free and are surprised by higher payments later.
"Why?" is skipped. The agent processes eligibility only, and customers in real difficulty take a holiday that delays help.
Repeated holidays. Several holidays in a row are a sign of difficulty. Cap them and route the customer.
Servicing system and records disagree. The schedule changes but the customer's statement or reporting does not reflect the holiday. Loan servicing has many moving parts; test the end-to-end effect.
Holidays used where restructuring is needed. A customer whose income has fallen for good needs a different arrangement; see handling loan restructuring requests with an AI agent.
Questions people ask
Can the customer cancel a holiday early?
Yes, in most products. The agent can apply the cancellation at depth 3 and recalculate the schedule, then confirm in writing.
Does a payment holiday affect the customer's credit record?
It depends on the product, the reason and local reporting practice. The agent should state what your policy says will be reported, from approved wording, not guess.
Should the agent offer a holiday to someone who did not ask?
Not as a product pitch. If a customer mentions difficulty, the agent routes them to support, where a holiday may be one option among several.