Repayment of credit
You have been dreaming about something for a long time, looking at the right subject, pricing and collecting money. And so, having taken the missing part with a bank loan, you bought it. But the limit for joy comes when there is nothing to pay for the loan. What are your risks in this situation?
Petty underpayments
- Penalty. A change of job, travel abroad or basic forgetfulness can lead to systematic failure to pay the loan obligations. The bank’s penalty for late payment may prompt a person to pay – its amount grows with each month of late payment. However, the penalty to the client may also end up on the penalty – if we are talking about a small debt.
- Blacklist. As a rule, most of such loans are issued promptly, the bank does not have time to study the client in detail, so the funds are allocated to him on express terms. If the loan amount was small and no payments are systematically received, banks rarely spend time and effort on such a client. They put him on the so-called “blacklist,” and in the future they may quite rightly refuse to grant a loan.
- Psychological pressure. However, there are those who do not just connect their own forces – the internal security service, the department to work with troubled clients. Conversations with the client who can pay, but does not pay, can be reduced to an appeal to the firm where he is employed. After the “educational work” most borrowers are ready to return to the execution of the debt to the bank. If not, the bank may agree to forcibly transfer part of the client’s salary funds to the bank. In fact, it is better to look for debt relief options.
The two main reasons for non-payment of the loan
The most common reason for non-payment is either temporary disability or loss of source of income. When granting “credit holidays”, the bank takes into account all conditions of the current situation. In a situation when the source of income is lost, the bank necessarily considers the level of a specialist – a client who has found himself in a difficult situation.
Ways out of the situation
If it is a person with a good education, having a profession in demand on the labour market, the average period of his employment is 1-4 months. If there is a risk that the issue will take longer to be resolved, then the bank offers alternative solutions. In particular, the easiest way is to sell the collateral for the loan and return the money to the bank. However, this option is not quite suitable for consumer lending. When there is a car or an apartment in pledge, it is much easier to solve the problem.
The reason for this is obvious – the institution that issued the loan has the right to seize the pledged property (real estate, car) in order to sell it later, thus covering the client’s debt. However, experts agree: if you are aware of a long financial crisis, it is better to sell your property, pay off the debt, and use the remaining funds from the sale at your discretion. And do not forget to go to the bank before the sale – to consult on how you will sell the apartment and at the same time repay the loan.
The most important point in communicating with the bank, when the money is about to be scarce, is to inform the bank. And it is better to do it at least one or two weeks before the next monthly payment deadline. Because this time is necessary to find the most appropriate option to help in this situation. Also note that such prudence will save the client from penalties for late payment and other troubles such as increasing the interest rate for the entire term of the loan for failure to comply with the terms of the loan agreement. For example, if the financial difficulties are temporary, the bank may offer the borrower the so-called “credit holidays”. You can also consider pennsylvania debt relief options.
