Have you asked for a bank loan and have problems paying certain fees? Know that there are entities that offer grace periods where, for a certain time, you should not amortize your debt. Follow this article and know the five most important aspects of this credit formula.
Although most banks analyze the financial situation of a client before lending a certain amount of money, the truth is that this risk study is not able to predict situations in life that can ruin the economic status of the client. a person.
A dismissal at work, the illness of a family member, a loss in housing, a theft… the chances of facing a financial crisis and not being able to take on the responsibilities to which you have committed are many.
And this is what banks have understood, who are increasingly aware of the eventualities that can occur and that can cause their clients to not be able to pay the monthly payments corresponding to their financial loans.
In this sense, grace periods could be the solution for those who find themselves in a difficult situation, since they exempt the client from part or all of the payment during a certain period of time.
Let’s review five aspects that you may not have known about the lack of bank loans.
1. Deficiency period: definition
Although we have explained it at the beginning of this article, we tell you that the grace period is a clause that can be present in some bank loan contracts and that allows you to freeze the total or partial payment of your monthly payments during a certain period of time.
Generally, grace periods are requested in the course of the contract in the absence of the client to pay their fees, however, it may also happen that the bank offers this option at the beginning of the loan to make the offer more attractive.
It is possible that if you have contracted a mortgage you have also heard this term, because it is a financial possibility that applies to different types of loans and products.
It is important that you know that grace periods are very common in student-oriented loans given their poor economic conditions.
According to your economic possibilities, at the moment of requesting a grace period you can opt for a total or a partial lack.
2. Total lack and partial lack
Let’s review what each of these alternatives is about.
If you opt for this type of grace period, you will not have to pay anything at all during the time you have determined.
That is to say, you will not have to amortize neither the capital nor the interests, reason why your monthly quota would be of 0 euros.
This is an alternative that is little used by clients since the risks tend to be greater.
Partial or capital deficiency
In this case, you will only have to pay the interest on your loan for the entire time stipulated in your grace period.
It is important that you know that the payment of the capital will be made once the grace period has ended.
This is the option most used by customers since the risks and subsequent payments are considerably reduced.
3. When to request a grace period?
It is important that if you find yourself in a complicated economic situation you analyze very well the possibility of requesting a grace period for your bank loan.
Do not forget that any debt deferral at the financial level translates into a higher debt burden later.
Given this we tell you that the grace periods are advisable especially for people who are in the following situations:
- People with an urgent and temporary financial emergency.
- Persons who have the guarantee that they will be able to face the subsequent reimbursement of the debt.
4. The risk of grace periods
As we have already said, the grace periods can represent a great risk for those who request it since it is an option that in the end is quite expensive.
That’s right, because during the period of time that you are not paying your debt the capital will remain intact and the interest will continue to rise.
Result? The loan becomes more expensive and what once seemed like a huge debt is now even greater.
It is true that the impact of this financial option depends on the type of lack you have chosen. While your debt will go up every month without realizing it, with the other you will pay a monthly sum and the capital owed will remain the same.
However, between the two options the most advantageous is the partial lack.
5. Alternatives for not requesting the lack in a bank loan
If you do not want to risk and are afraid to hire a grace period or think that this is not the right option for you, find out that there are other options in the face of a financial crisis.
If you want to reduce or temporarily eliminate the amount of the fees of your bank loan you can extend the repayment term in a few months or years and thus lower the amount of the monthly payments.
However, with this option you will also end up paying more than at the beginning of your contract. The best thing will be to analyze which is the most convenient option to your situation and with which you will lose less money.