The problem with repayment of the installment
When paying off the loan every month, we transfer a certain amount of installment to the financial institution to settle the debt. Sometimes, however, we may find ourselves in a situation in which repayment becomes a problem, for example in the case of sudden illness or other unexpected expenses. In this case, credit holidays will be a great way out of the situation, thanks to which we can suspend the repayment of the installment for one or several months.
How to use such a solution and when will it be a good choice?
Credit holidays make it possible to omit, and more precisely, repay the repayment of one or several loan or credit installments. We must therefore remember that credit holidays do not allow you to avoid repayment of the liability, but only to suspend it for a certain period of time. We simply pay the installment on a different date. Credit holidays can be of great help when the aforementioned additional expenses appear. Then we can treat holidays as an emergency exit, to avoid problems with repayment of the installment. However, let us remember all the time that the installment is not lost and we will have to give it back in the near future. This, in turn, may be a problem for us when we will have two installments at the same time.
Credit holidays are a fairly well-known service offered both as part of loans and loans. We can use them not only in banks, but now also non-banking loan companies give their clients such an opportunity.
Under what conditions the bank grants credit holidays
The terms of credit holidays may vary depending on the financial institution. Most often, we have the option of suspending the repayment of one installment once a year. It may also be that credit holidays will only be available once every couple of years. In addition, a maximum limit is applied to the total number of breaks, for example, three times for the entire contract. We will learn about all details from the concluded loan or credit agreement.
It should also be taken into account that the bank or other institution will refuse to grant credit holidays. This is most often the case when the client has not repaid the other liabilities on a regular basis. In addition, the bank does not always allow the entire installment to be postponed, and only its capital part – then we will have to pay interest anyway. It is worth paying attention to when exactly we will have to settle the obligation, as well as the consequences resulting from such repayment. Usually, it is added to the loan or credit balance and increases subsequent installments or extends the repayment period. It may also happen that it will be necessary to pay two installments simultaneously.