Time for credit holidays – take a break from financial obligations!

20 Feb

 

Speaking of holidays, we think about well-deserved rest and deliverance from all worries. Credit holidays operate similarly, as they have a “rest” and a moment of respite from paying off installments of a loan. Therefore, before we get another loan, it is worth sending your commitment for a well-deserved … vacation! Where can we apply for credit holidays and when they are most profitable?

Credit holidays – a break from finances!

Credit holidays - a break from finances!

The Christmas period, right next to the holiday season, is the time when the biggest problems arise with timely payment of obligations. Problems with paying bills, which are joined by subsequent installments of credit or loans – effectively reduce the already strained home budget. In such cases, banks offer a service called credit holidays.

What exactly is it about? Credit holidays, despite the fact that at first glance they sound extremely carefree and optimistic, they are only a gate that the debtor can use in the event of a loss of financial liquidity. This is a temporary suspension, not a redemption (!) Of repayment, at the borrower’s written request. This means that after a set break it will be necessary to settle outstanding and current debt installments! As you know, crises can not be predicted – which is why more and more financial institutions offer not only the option of “holidays” for mortgage loans, but also cash loans or even loans. However, they are granted on different terms and … not to all applicants.

Who deserves credit leave?

Who deserves credit leave?

Credit holidays, even short and occasional ones, in some cases will allow for a “soft landing” and control of laid-back finances. However, they are not a solution in the long run and a chance to get out of debt …

Why? One of the key reasons is the exemplary attitude of the borrower. This means that the chance for a temporary deferral of debts is available only to borrowers who are distinguished by timely repayment, at least the first 12 installments of the loan. In addition, they have never been able to show any problems with paying off their debts before and have fulfilled all points in the loan agreement without fail. Customers are in a lost position, who in the past did not pay their debts on time, which is crowned by a presence in databases. People who pay financial obligations less than 12 months may also have a problem in getting permission for a credit vacation. This year is a kind of test for a financial institution to show whether the borrower is really a reliable customer and not only on paper.

Credit holidays and grace period

Credit holidays and grace period

At the very beginning it is worth mentioning that the concept of credit holidays cannot be synonymous with a grace period. This first solution offers a break in debt repayment, including capital and interest. In contrast, grace is a “bait” often used for mortgages, occasional loans or holidays. It means deferring the payment of the principal part, while the interest part should be regularly repaid. For example, after making Christmas purchases, the first installment of the loan falls to be repaid after the New Year. In such cases, the interest is even included in the grace period. Therefore, there is nothing to delude yourself that in a few months of freedom from paying the debt, we will not suffer any losses. In the bank, as in life – there is nothing for free …

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