Nowadays, banks go out to people giving them many opportunities to adapt the rules of repayment obligations to their current situation. Credit holidays can be taken by almost anyone who has a bank loan. However, the details of the regulation of such offers differ from bank to bank. The term ‘credit vacation’ can be misleading because you can use a suspension of repayment at any time during a calendar year. However, we can only exercise this right after 12 months of regular debt repayment.
If we had problems with repayment before and there were delays
We have to reckon with the fact that the bank may not agree to suspend the repayment or it will simply be more difficult for us to negotiate a credit holiday. As a rule, if you want to take advantage of credit holidays, you only need to inform the bank in advance. Without this information, our behavior will be treated as a delay, and the bank will try to collect the installments due from us. It is the number of days before the planned installment that we must notify the bank that we will find in the loan agreement. Most often it is between 7 and 14 days. Usually, a phone notification or even an ordinary email is sufficient. We don’t need to explain why we want to take advantage of credit holidays.
What do you have to pay back?
Credit installment is a broad term. It consists of the principal part of the installment and the interest part. There are banks that suspend the entire installment, but in several institutions we can suspend the repayment of only the capital part. This means that we have to regulate credit costs on an ongoing basis. Depending on the loan period, interest rate and time of loan repayment – the structure of installments in terms of principal and interest varies greatly. At the beginning, the capital part may seem relatively small compared to the interest part and such suspension may not give us much. It is worth remembering that most banks will not charge us any additional fees for taking a credit holiday. We must not forget that after a loan holiday you have to pay back unpaid money. The installments most omitted earlier are added to the capital part, which increases the next monthly commitment. It also happens that banks extend the loan period (instead of paying back 20 years, we will pay back 20 years and one month).