What are Credit Holidays? Postponing the Repayment Date of the Loan Installment
The loan is equal to the installments
Taking a loan is not only a chance to quickly obtain the necessary cash. It is also a long-term commitment for us. So before we decide to take a loan it is worth considering whether we can afford it. Will our household budget allow us to repay our liabilities in a timely manner. This is especially important when we decide on a loan with high sums with a long-term loan period.
Of course, even this does not give a hundred percent guarantee that something unexpected will happen to us, which will significantly weaken our home budget and make us unable to repay loan installments in a given month. What to do when we encounter an unforeseen random event that will result in a bad financial situation and inability to repay the installment in a timely manner?
What are credit holidays
Before we take out a loan, it is worth not only to examine all available offers and choose the cheapest one, but also to check what proposals a given institution has for us in the situation of, for example, sudden loss of employment. If you do not know what credit holidays are yet, and you are planning to take a loan, here are a few words for you.
Credit holidays are a banking product that can help in a situation when we have temporary financial problems and can not afford to pay off debts. In this situation, we can apply to the bank for a credit holiday, or ask for a postponement of loan repayment dates.
In other words, credit holidays are a break in loan repayment granted by the bank for a period of 1 to 12 months. However, it is worth getting acquainted with this before signing the loan agreement, as not every bank offers such a product. In addition, each bank grants credit holidays on other terms.
Is it worth using a credit holiday?
Often, banks charge an additional fee for granting credit holidays. However, in a situation when we have temporary problems with financial liquidity because, for example, we lost our job unexpectedly, but we are already looking for a new, credit holidays are a great solution.
For some time, we will not have to worry about additional expenses related to repayment of loan installments. For this we will not generate additional costs in the form of interest on untimely repayment of the loan. We will not spoil our credit history, which may decide that we will not get credit in the future.
In order not to risk problems with the bank and the negative consequences of non-payment of loan installments on time, it is worth warning the bank about its temporary financial problems and applying for credit holidays.