Credit deferral is a very important and necessary tool in case of any force majeure circumstances that occur in our lives. Dismissal, temporary disablement and other exceptional circumstances may lead to us being temporarily unable to meet our credit obligations. In this article, we’ll talk about how to properly use a credit deferral tool.
In the event of difficult circumstances, many banks come to the borrower to resolve their problems and return to the trusted borrower. For such cases, both the general terms of employment and the individual approach apply to banks.
What are the main types of credit delay offered by banks?
- “Credit vacation principal”. This means that the borrower has to pay at least interest each month on the use of the funds (which is less than a full repayment of principal).
- “Interest Credit Holidays”. Conversely, a very advantageous situation, the deferral of a loan payment, in which the borrower, on the contrary, does not pay interest on the use of the funds but makes payments to repay the principal.
- “Both principal and interest credit.” A way of deferring a loan payment when the borrower has the option of not making monthly payments for a short while. This type of vacation is for really emergency situations and is usually limited to 1-2 months.
Let’s justify its need
Of course, banks will not give you a credit vacation for no reason. You need to justify the seriousness of your circumstances and guarantee that you will continue to pay properly at the end of your credit vacation. Usually, the reason for granting a credit deferral is:
- job loss (you have lost your source of income and are looking for a new one);
- illness (you are seriously ill, have a disability or are incapacitated for work);
- loss of breadwinner or relative (you have lost a loved one who has provided income for your family or is seriously ill);
- severe force majeure (for example, you have a burned flat)
In any case, deferral of your credit payment will require you to work hard – you will need to collect documents proving that the bank is in serious circumstances. Hospital Certificates, Dismissal Documents and more.
Similarly, deferral of a loan payment may be difficult and even impossible for the following categories of persons:
- if you have made late payments before the occurrence of such circumstances;
- if you have lost your main source of income at will (you have decided to retire yourself – you have to consider how you will repay the loan now);
- you are suspected of fraud; – the credit agreement has been concluded for less than 3 months or must be terminated in less than three months.
How to Design. Credit deferrals are executed in different ways, depending on the terms of the particular credit agreement.
- If your contract provides for a credit vacation right away, read the points carefully, get all the documents you need right away, and go to the bank. The Bank will follow the same procedure as provided for in your contract.
- If the contract initially does not provide for this option, the bank will consider your application individually and make a decision.
- Likewise, many banks have the option to restructure debt alongside a credit holiday, when you and your bank representative can review your credit terms – for example, extend the duration of your credit agreement by reducing your monthly payment.
In any case, remember: Credit deferral is a short-term tool, use it quickly and efficiently, and do not sit idle, and use every possible means to get your credit back on track as quickly as possible.