When repaying the loan, we transfer a specified amount of the installment to a financial institution to settle the debt. However, sometimes we may find ourselves in a situation where repayment of the installment becomes a problem, e.g. in the event of a sudden illness or other unexpected expenses. In this case, a great way out of the situation will be credit holidays, thanks to which we can suspend payment of installments for one or several months.
How to use such a solution and when will it be a good choice?
Credit holidays give you the option of omitting, or more precisely, postponing the repayment of one or several loan or credit installments. Therefore, we must remember that credit holidays do not allow us to avoid repayment, but only to suspend it for a specified period. We simply pay the installment at a different date. Credit holidays can be a great help when you have the additional expenses mentioned earlier. Then we can treat the vacation as an emergency exit to prevent problems paying the installment. Let’s remember, however, that this installment is not lost and we will have to pay it back in the near future. This, in turn, can be a problem for us when we have two installments to repay at the same time.
Credit holidays are a fairly well-known service offered both as loans and credits. We can use them not only in banks, but now also non-bank loan companies give their clients such an opportunity.
Under what conditions does the bank grant credit holidays
Credit vacation terms may vary depending on your financial institution. Most often we have the option of suspending the payment of one installment once a year. It may also be that credit holidays will only be available once every few years. In addition, the maximum total number of breaks in repayment applies, for example 3 times for the entire contract. We will learn about all the details from the loan or credit agreement concluded.
It should also be taken into account that the bank or other institution will refuse to grant credit holidays. This usually occurs when the customer has not repaid his remaining liabilities regularly. In addition, the bank does not always allow the transfer of the entire installment, but only its capital – then we will have to pay interest. Therefore, it is worth paying attention to when exactly we will have to settle the liability, as well as the consequences of such repayment. Usually it is added to the loan or credit balance and increases subsequent installments or extends the repayment period. It may also be necessary to pay two installments at the same time.