What are credit holidays – Postponement of the loan installments repayment date

Before we take a loan, we need to think carefully about whether it is associated with it. It is especially important in a situation when we incur liabilities in the bank for several or more years. In such situations, of course, we are not able to predict what might happen to us in a few or several years. However, by assumption, before we take a loan, we should consider whether we can afford a loan. What does it mean? We must consider whether our financial situation will allow us to pay our installments regularly.


What are credit holidays

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Credit holidays are an option to postpone installment repayment. When something unexpected happens to us, which will significantly worsen our financial situation. In the event of a fortuitous event, such as illness or sudden job loss, credit holidays can come to our aid. So use them with caution and do not abuse just to have more money for pleasure. It should also be remembered that credit holidays are a product that we will not find in every bank. So let’s find out more before signing the loan agreement, so you won’t be surprised later that our bank does not offer loan holidays. In addition, each bank grants credit holidays for a different period and on different conditions, which we also need to find out in a particular outlet.


Types of credit holidays

Types of credit holidays

How does it look in practice? There are several ways in which banks grant credit holidays. It can be deferment of installment repayment and extension of the loan period. In this way, we do not repay installments for 1 to 12 months and extend the loan period in the same way. Another way is to add the total amount of deferred installments to the last loan installment. We then repay the entire deferred liability with the last installment. We can also add deferred installments proportionally to all other loan installments. In this way, the interruption in payment of receivables will increase the amount of other installments. In special cases, banks may also propose individual conditions for credit holidays.

It should also be remembered that credit holidays do not mean that our installment will be lost. This is only to give us time to recover from a bad credit situation and to go straight, while not generating additional costs in the form of interest on late repayment of the loan. Despite credit holidays, we still have to surrender all liabilities

Charles Gerber

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