Poles willingly incur credit obligations and try to pay monthly installments on time. Sometimes, however, there are situations when the household budget is heavily strained and it is not possible to find funds to pay the debt. Instead of avoiding payments, it’s better to opt for a credit vacation. Check what it is and who can use this option.
Even if the loan decision is carefully thought out and the borrower is able to pay the loan in time, it is difficult to predict what the future will bring. Unplanned and large expenses can happen to anyone, which often worsens the financial situation at home. Due to the fact that banks want borrowers to pay their debts in full, they activate many mechanisms in the event of difficulties in paying the debts. One way is credit holidays.
What are credit holidays?
Credit holidays should be understood as the option of postponing the repayment of principal and interest installments on the conditions set by the bank. Such temporary suspension of repayment is granted on the basis of the institution’s internal policy – conditions may be set for borrowers, etc.
The duration of credit holidays varies quite a bit – from 1 month to even 12 months. However, this depends on the particular bank, type of loan, and even the reason for applying for a deferment of payment of the entire installment. Therefore, before expressing a desire to obtain a credit vacation, you should carefully read the contract and the records therein.
Credit holidays – consequences for the borrower
The effect of credit holidays is to temporarily postpone repayment, but the borrower has many other consequences. The choice of such a solution involves one of the following options:
- extending the loan period,
- increasing the monthly installment
- increasing the amount of the last monthly installment.
Regardless of the option chosen, the borrower should take into account the increase in the total cost of the liability incurred – due to the increase in interest costs.
Credit holidays and grace period – what are the differences?
In the context of repayment, not only credit holidays but also grace periods are often discussed. Although in both cases it is a kind of deferment of payment, one main difference can be identified.
In the event of a grace period, the borrower temporarily suspends repayment of the principal part of the installment, paying the interest part at all times. However, during the credit vacation period, the repayment is suspended.
Credit holidays – not for everyone?
You already know what credit holidays are. At the same time, you are wondering if this option is dedicated to all borrowers? And in this case it is an individual matter – depends on the specific bank.
Most often for credit holidays you have to “deserve”, for example, timely repayment of the first installments. Usually, you can apply for a deferred payment after 4-6 months. On credit holidays, however, do not count people who in the past had a problem with timely repayment of this obligation.