If you took a loan from the bank, and you can no longer pay it off on time, don’t panic. There is a way out of the situation in any case. Due to different life circumstances, everyone may have a situation where it is no longer possible to service a loan taken earlier. This can happen for various reasons: pay cut, illness, dismissal, and the like. What should be done in such situations? How to intelligently deal with such a problem? Here are some of the best ways to go about it.
Contact Your Lender
First of all, if a situation arises in which it is impossible to service previously taken loans, it is necessary to contact your lender and explain why it is currently impossible to fulfill the obligations assumed under the loan agreement. If you delay contacting the bank, it will be much more challenging to negotiate with them later.
There are no specific deadlines for notifying the bank about a possible delay. The main thing is to do it before it occurs, as a last resort, when the next payment is made. They will come up with a new model that will see you repay your loan comfortably.
Honesty Is the Best Policy
When communicating with bank representatives, you should be sincere and sensibly assess your capabilities. This will help the bank to understand your position better. The most important thing in negotiations with the bank about the current situation is not to assume obligations that cannot be fulfilled in the future since you will have to answer for each responsibility.
Options are Possible
The solutions to the problem that have arisen can be very different and depend on each specific bank. Some banks may offer “credit holidays,” that is, full or partial suspension of payments for up to six months. Also, the bank can sign an additional agreement with the borrower, according to which the expiration date of the agreement is postponed to a later date. For now, the borrower will pay only interest on the balance of the debt.
In other situations, the bank may agree to refinance the loan. For example, increasing the term of the loan itself can reduce the monthly payment to an acceptable level for the borrower. In some cases, the bank may require additional surety or property pledge. You can draw up a debt repayment plan or refinance your loan with another bank.