However, taking credit and calculating the ability to repay them within the contractually agreed time period may lead to financial problems that make it difficult to repay the loan, whether it is a quick , study , consumer or mortgage loan . However, even in such situations, banks and other credit institutions offer their customers a solution and are credit holidays. Such a service means that for a period of time agreed upon by the borrower and the issuer, it is possible to get rid of credit payments. Of course, this amount must be repaid later.
Using a loan holiday service gives the borrower the opportunity to look for a way to deal with credit obligations. Although this is just a periodic exemption from monthly payments, it is enough time for a person in difficulty to find or at least consider an alternative to earning money or paying for unforeseen events that would not otherwise be possible. A credit vacation is a service offered by a credit institution or a bank to make life easier for its client, so you should not avoid using it if necessary.
The loan holiday service is also used when the individual wants to simply get rid of the strict repayment schedule and go for a trip, for example.
What are the credit vacation options?
Usually banks and other credit institutions offer incomplete and full credit holidays.
Incomplete credit holidays
Most often, partial credit holidays are offered, which means that the borrower may not pay the principal amount of the debt for a period agreed in advance. In order to get this opportunity, you need to write an application to the credit institution and explain how the borrower has come to the situation and why a credit vacation is needed.
It is also necessary to inform in the application that the box has been made to make payments again according to schedule after the end of the loan holiday. However, the partial credit vacation does not mean that the borrower is fully released from the debt repayment, as it will be necessary to continue paying the monthly interest payments. However, they have temporarily reduced their total repayment amount, which will allow them to overcome financial difficulties and return to regular payments.
Full credit holidays
Full loan holidays require the borrower to be fully exempted from the loan repayment – both monthly and interest – for one or more months. It is more difficult to get this opportunity because this request must be very well founded. Therefore, such credit holidays are granted less frequently.
Each creditor has indicated the cases in which credit holidays are granted. These are cases that cannot be anticipated and predicted in the past, such as loss of work, family growth or an accident. If the borrower is in financial difficulty, it is necessary to go immediately to the branch of the credit institution and, in consultation with its employees, try to find a solution together.
There are also loan holidays for quick loans that allow you to pay a certain amount of money and extend the repayment term. Most often, a credit repayment is offered for 7, 14, or 30 days, and you need to find a way to redeem your credit.
What to do when your credit vacation ends?
When the credit is over, the borrower has two options for continuing his monthly payments. Tosir can be paid by refinancing the loan or extending the repayment term. After the end of the part-time holiday period, usually monthly payments are slightly increased because credit holidays do not mean that the payment for this period has been canceled. Therefore, outstanding payments during this period are equally distributed and added to the remaining repayment term. Credit holidays are part of the loan repayment term, which means that the bank or other credit institution does not automatically extend the repayment period.
The borrower has the right to request an extension, but in such cases it is also necessary to take into account the longer credit obligations and the longer time the borrower has to pay the issuers. This should also be taken into account when evaluating the need for credit holidays and finding solutions to overcome your financial difficulties.
When resuming payments after full credit holidays, the monthly payment that follows the end of the holiday period is added to the amount of interest paid in the given time period. The basic amount, as well as the incomplete loan holidays, is divided into the remaining repayment term. Here too, an extension is possible.
Using a loan for a holiday study loan
the usually granted term is for the whole school year or for a longer period of time for the student to complete the training and find a job. In the case of such a loan, only partial credit holidays are possible. Long-term loans, such as mortgage loans, which require a pledge or guarantee, can be used for a number of times during the loan repayment. This is possible because such loans are usually taken for several years. In such cases, partial credit holidays are offered, where the borrower bank or credit institution only has to pay interest.
If there is a clear understanding of what credit holidays are and what the benefits of this service are, as well as the drawbacks, it is much easier to decide whether or not to use them. While credit holidays do not reduce the amount to be returned to the credit institution and are only a temporary relief, it is an opportunity to fine-tune your financial situation when you need it.