Having a loan does not at all mean that debt repayment should be constantly carried out according to a strict schedule. Depending on the client's life situation, the bank can make certain concessions, for example, provide a "credit vacation" service, which provides for deferred payments.
The concept and types of "credit holidays"
"Credit holidays" is the deferral of monthly payments on loan debt, which the bank provides to the borrower for a certain period. This is necessary so that the client can take a break and improve his financial situation. There are several vacation options, including:
- full deferral;
- partial deferral;
- currency conversion of the loan.
The main service option in most organizations (Sberbank, Raiffeisenbank, Alfa-Bank and others) is a full deferred payment. It provides for the complete termination of payments on the loan, including interest on it. Such deferral is granted for good reason and in urgent situations only. The borrower will have to provide evidence confirming his complete insolvency at the moment.
As part of a partial payment deferral, the bank draws up a new repayment schedule for existing debt. While the "credit holidays" are in effect, the client will make smaller payments, often consisting only of accrued interest. At the same time, the bank makes some more conditions that must be met by the borrower. However, the requirements are usually quite loyal, and the chance of obtaining the appropriate "credit holidays" is high, even if the person is recognized as solvent.
Currency conversion provides for the change by the bank of the currency in which the loan was issued. The one that has the most favorable conversion rate is chosen as the main one. This not only helps borrowers to cope with debt repayment, but also to avoid its increase in the event of a default of the main currency of the loan.
How to apply for a "credit vacation"
The main circumstances considered by the bank to be sufficient for registration of a "credit vacation" include:
- loss of the only source of income (breadwinner);
- death or serious illness as the borrower himself;
- expensive treatment or recovery from illness, injury or injury;
- loss of main property (living space) due to natural disasters;
- pregnancy or maternity leave.
Thus, people who are in difficult financial or life circumstances have the greatest chances of getting an extension. In such cases, it is necessary to collect supporting documents, for example, a work book, a certificate from a medical institution or other government agencies. Next, you need to visit a bank branch and draw up an application on the organization's letterhead with a request for a loan deferral.
Bank representatives conduct an interview with a client applying for a "credit vacation", during which documents are checked, the person's current solvency and the estimated time frame for which the borrower will be able to return to their usual lifestyle are found out. In some cases, an installment plan can be provided to the client without providing supporting documentation. This can be claimed by borrowers with an impeccable credit history, who are highly trusted by the bank. Each case is considered on an individual basis, followed by a verdict, and the bank independently decides which installment plan will be optimal for a given client.
Depending on the type of "credit vacation", the service may have a certain cost. A full deferral usually does not require additional investments, however, a partial installment plan or currency translation is estimated at approximately 15% of the monthly payment amount. This means that the amount of debt will be slightly increased, but the client will begin to pay it after the end of the "vacation" period. At the same time, it is not prohibited to make any possible loan amounts during the grace period, which will avoid unnecessary overpayments in the future.
