Due to the low-interest rates on loans, many people have started borrowing in recent years. The low interest rate environment and easy access to credit are very attractive to the population. The only problem is that many have overstated their installments. What can you do if you are unable to pay the installment? Don’t despair, there’s a solution!
Can’t pay the installment? Investigate the problem
The reason being unable to pay your repayment is not only because you have overpaid your borrowing, but there are many other things that can hinder your payment. The problem may be temporary or permanent, and depending on this, you need to find the best solution to overcome the difficulties. The first and most important thing to do is to recognize and diagnose the problem. You should be able to determine when your financial situation will return. In the meantime, don’t hesitate to cut back on your monthly expenses and just spend what you really need. Set up a payment order in which the installment is one of the first.
Can’t pay the installment? Solutions
It is a good idea to contact your bank in time to inform them of the situation. If your payments are still fine and you have not slipped off your monthly repayment, but you feel that you may have a problem with your payment, redeeming your loan may be a good solution. In this case, you may want to look for a more favorable loan structure with the bank where you have the credit or look at what other credit institution offers. This step can be very advantageous if you have an older, good couple of years of expensive credit because the more favorable loan has come out since then.
An application must be submitted to the bank and, if approved, the original contract may be modified. If the term is extended, you will have less monthly repayments.
Your monthly installment will temporarily decrease
Some banks may also have the option of agreeing with your credit institution to temporarily reduce your monthly installment. The difference is added to the capital debt. This can only be a solution if it is a temporary, financially resolvable problem.
A capital moratorium means that you do not pay back the capital during this period, but only pay interest and any management costs to that financial institution. This solution also temporarily helps you reduce your monthly installment. During the defined capital moratorium, the outstanding capital debt is not reduced. Thus, after the capital moratorium expires, the repayment installment will increase compared to the original monthly repayment. A capital moratorium is only required for mortgages.
Loan insurance can be a solution. However, you should be aware that you are only providing assistance in cases that are specified in the insurance contract, so it is not always available. In most cases, the service only starts after a few months, the period before it is considered to be deductible. There is a premium for the credit coverage insurance, which is usually 3-6% of the repayment.
Can’t pay the installment? Avoid credit check list
If you are unable to pay the full loan repayment, cancel as much as you can. Thus, on the one hand, debt builds up slower and, on the other hand, you may get away with being listed on the credit check list of bad debtors. Debtors accruing overdue debts of more than 90 days over the minimum wage are posted here, ie if they are partially repaid they will reach the minimum wage slower.
It is important that you do not appear on the credit check list, as those on the list are practically non-creditworthy, so for example a loan can no longer be considered a solution. However, in many cases, this can reduce the monthly repayment to a level that can be paid by the debtor.