In life, there are many situations that are unpredictable and can quickly lead to financial bottlenecks.
This can be the loss of the job, changing family situations, expensive car repair and much more. In all these cases, the account eventually reaches its limit of exposure. Although loan loss insurance protects the borrower in some cases, it also causes additional costs. These accrue independently of a claim. The rate break is possible at some banks without special insurance. The loan can then be deferred.
Suspend loan – the norm
Normally, to repay a loan, it is necessary for the borrower to pay the agreed rate on time and without interruption to the loan company. However, due to financial constraints on the borrower, one or more loan installments may need to be suspended.
This suspension is always to be applied for from the bank concerned and usually tends to be negative.
Of course it is best if all installments are paid as agreed in the loan agreement. Remaining rates should be avoided at all costs . However, there are cases or life situations in which a suspension of the loan rate can not be avoided. The borrower should then consult with the loan company. For a rate suspension, the bank’s approval is always required.
Rate breaks in the loan agreement agree
Many lending companies today offer loans to their customers that can be suspended. This is stated in the contract. The borrower can thus hedge for possible installment breaks in the loan agreement. The contract here contains an agreement that the borrower may suspend a certain number of installments annually. In these cases, there are usually additional costs, regardless of whether the installment relates to a normal or a loan agreement with a special suspension clause. This also depends crucially on the respective lender. Many banks charge a special processing fee when a rate is suspended. Other loan providers, on the other hand, do not charge any additional fees. The borrower pays only the maturing interest. However, the payment of the suspended installment is to be made up in any case. So before you take out a loan , pay attention to these contract details.
The deferral of a loan is always negative compared to the regular repayment agreement. The lender incurs disadvantages that he can reimburse in most cases by the borrower. The compensation of the costs takes place either from the outset by additionally calculated fees and interest or additional contributions, if there actually comes to a suspension of the rate.
What to do if a loan line suspension becomes necessary?
If the suspension of a loan line can not be avoided, the customer must inform the bank about it. Simply dropping the rate is not an option, and a direct debit return should be avoided as much as possible. The borrower must definitely contact the lender and explain in a personal conversation why the loan installment should be suspended.
Often, only a temporary financial bottleneck is the reason for the suspension of the rate. In the event of a long financial shortage, it is often possible to permanently reduce the rate. All this, however, must be negotiated with the responsible loan institution . It must in any case give his consent to the rate suspension. As a rule, the lender always wants to know why a rate can not be paid as agreed in the contract. He also proposes to the borrower how best to defer the loan .
Anyone who is not sure if an existing loan can be suspended is also able to read this in his contract documents.
What happens if I can not pay my loan?
If the borrower does not get in touch with his bank in time due to financial difficulties, the default rate is threatened . If the borrower is already late with his rate, he receives a negative Schufa entry . Not only are all debts collected in the loan information file, but it is also recorded whether the debtor always pays his installments on time. The Schufa has a special algorithm. A customer with a negative Schufa entry does not easily get another loan, because in many transactions and contracts, the Schufa is first checked.
Not only the negative Schufa entry is the consequence of rate delay. The reminder costs can be high. Some loan intermediaries charge a fee of up to € 9 for a letter of formal notice. Even if the arrears installment amounts to five percent of the loan amount, this has a negative effect. Even with loan terms of less than three years and 10 percent of the loan amount, the bank has the right to terminate the contract. Even after three reminders sent a notice of termination is fulfilled. In the third reminder the termination of the loan must be threatened. After the third reminder, the borrower still has a deadline of two weeks to compensate for the missing amount. If all these conditions are met, the bank is entitled to terminate the loan. Then the repayment of the full loan amount is due. If the borrower is unable to do so, the initiation of foreclosure follows.
What alternatives to rate exposure are there?
A rate break is possible at a variety of banks. There are usually no additional fees due, but of course interest must be reimbursed. Nevertheless, the rate exposure is the better option compared to the rate default. If a borrower wants to be on the safe side, he should already pay attention during the loan comparison, which loan provider guarantees a break. Some banks even allow a break in bids every six months . Also, the rates can be lowered permanently or over a short period of time . If there is no special rule for a break, it is always advisable to contact the bank and to inform it about the situation. If the lender pauses for a break, it is in his favor, as he can secure interest over a longer period of time. The term of a loan can be pulled too long by recurrent installment delay too. This is then negative for the bank, as it originally completed the loan on completely different terms. If a longer term is agreed from the outset, higher interest rates are also possible.
If the bank does not grant a break, further alternatives are possible to avoid late payments. One way is to overdraw the account . However, the loan line is very expensive, but clearly the better choice compared to Schufa entry or a dunning procedure. If there is no collection or interest is too high due, a micro-loan makes sense. This loan can be used to prevent a late payment because the amount is fast on the account. However, this type of loan should only be applied for a maximum of 30 days. If the term is two months, this variant is much more expensive. Because there is a fee for the total amount and two months, although half is already after one month to repay. It therefore makes sense to apply for the loan only for 30 days. If the money is then again scarce, a new loan should be requested for another 30 days. The loan amount can then be lower, for example, over a third or half of the installment.
A combination of micro and installment loan is possible. It is possible to borrow between 100 and 3000 euros and pay in two to six installments of at least 50 euros. For example, if a rate of € 300 is normally payable, this amount may be borrowed through direct money and repaid in up to six installments.
A loan for which high interest is payable can also be rescheduled with a cheaper installment loan . Thus, the amount of monthly installments can be significantly reduced in many cases.
When money is tight and there is a risk of late payment, sometimes it is also the right way to borrow money from family members. For this usually no interest or special terms are required and a financial shortage can be bridged so well.