The essence of prolongation. MFO Honestly
Loans are considered in demand banking products, used by individuals or companies. They allow you to make the necessary purchase at any time, for which funds are paid in gradual and low payments.
Important! Loans issued using credit cards are considered especially popular, since it is convenient to pay for purchases with these cards in any store.
The essence and specifics of prolongation
Before applying for any loan, a person must evaluate his financial opportunities for monthly transfer of a specific amount to the bank. To do this, the stability of receiving funds and the size of the salary are taken into account. But it is impossible to predict various emergency situations in which a person may lose his earnings or cases may arise when the money must be spent on other purposes. In this case, difficulties arise with repaying the loan. The solution to this problem is to extend the loan agreement. It makes it possible to significantly reduce the credit burden on the payer, so he can easily cope with payments, which reduces the likelihood of delays.
Important! If you do not take advantage of the extension, but simply ignore payments, this will lead to a deterioration in your credit history, the accrual of fines and penalties, as well as forced collection debt through bailiffs or collectors.
What is a loan extension? This process is a peaceful and formal solution to the problem associated with the inability of the payer to pay the loan. The service is provided by banks, and it assumes a significant reduction in the credit burden. This service is beneficial not only to the borrowers themselves, but also to banks. This process is otherwise called restructuring.
Having understood what loan extension means, every borrower can use this service in case of difficulties with payments. The main types of extension include:
- extension of the loan term, which leads to a significant reduction in monthly payments;
- provision credit holidays, during which either only interest is paid or no funds are paid at all, and the main purpose of such a service is to provide the borrower with the opportunity to improve his financial situation so that he can easily cope with loan payments.
Important! Offered this opportunity only if the payer provides evidence of financial difficulties that have arisen.
Extension procedure
Typically, when drawing up a loan agreement, the possibility of the borrower using an extension in the future is indicated. If the document is missing this information, then you need to contact the bank branch where the loan was issued to find out about the possibility of obtaining it. Some credit institutions offer this service for each payer, but this is not specified in the contracts. An important condition To carry out the extension, it is possible for the borrower to prove that financial difficulties really exist, and they also arose unexpectedly and not through the fault of the payer. The likelihood of obtaining a renewal increases if certain conditions are met:
- the payer is an active client of the bank, and he must constantly use its various services and offers;
- before the onset of financial difficulties, the citizen conscientiously fulfilled all his obligations to the credit institution, so he had no arrears;
- the person has a good credit history;
- there is collateral, so the bank is in any case confident that its funds will be returned.
Important! It is recommended to apply for restructuring before the immediate delay, so if you do not have the money that is necessary for the monthly payment, then you need to inform bank employees about the current situation in advance.
How to apply for an extension
If the borrower has difficulties paying the loan, he must promptly inform the bank about this in order to be able to arrange a restructuring. Only important life situations are allowed as reasons, which include:
- loss of main place of income;
- the occurrence of complex diseases;
- getting into an accident or receiving a certain degree of disability;
- other significant events leading to loss of solvency.
To carry out the extension process, it is imperative to gather full package documents, which include:
- passport and TIN of the payer;
- certificate received from the place of employment;
- documents confirming the occurrence of a specific incident that led to deterioration financial situation citizen.
If, after studying these documents, the bank approves the extension procedure, then a special agreement is drawn up. It specifies new loan terms or other conditions leading to a reduction in the credit burden on the payer.
Important! Banks offer the opportunity to renew only once.
Is the process beneficial for the bank?
Loan extension is not only a way to help borrowers who find themselves in a difficult financial situation, but also a profitable process for the lending institution itself. Therefore, situations are rare when banks refuse to sell it to payers. The advantages of prolongation for credit institutions include:
- by increasing the loan term, interest rates increase, which has a positive effect on the bank’s profits;
- the likelihood of the borrower returning funds increases, since he is provided with simple conditions for making payments;
- there is no need to collect funds from clients who are in arrears, and this process entails additional waste of money and time.
Thus, prolongation of various loans is a popular procedure for many borrowers who have difficulty paying loan payments. It is offered by almost every modern bank, and at the same time it is considered beneficial not only for payers, but also for themselves. banking institutions. It is recommended to request this service before the actual delay occurs, since in this case the payer’s credit history will not deteriorate.
Like any official document, a loan agreement can be extended with the consent of both parties. All that remains is to understand who and why may benefit from the extension of the loan agreement.
The essence of the term prolongation
Prolongation or renewal in financial sector It is customary to call the extension of the validity period of a particular contract, agreement, or assumed obligations. Most often, financial institutions in our country face prolongation:
- Deposit agreements, favorable deposits for the client;
- Card service agreements;
- Loan-related insurance contracts.
As a rule, prolongation is very convenient for clients, as it significantly saves their time. After all, with the automatic extension of agreements that neither party wished to terminate at the end primary term, the client does not have to waste time visiting a bank branch or re-issuing documents.
Prolongation can also be non-automatic, executed using a separate additional agreement. In some cases, the extension of an existing contract can be carried out regardless of the consent of the parties - in accordance with the law, for example, if certain circumstances arise that have signs of force majeure.
Prolongation, in contrast to the re-conclusion of a particular contract, is an extension of the validity period of previously concluded agreements on the same conditions, with the same contract validity periods, with the same payment amounts banking services. The main advantage of renewable contracts can be considered:
- Significant savings in your own time;
- Save to new term beneficial to the client terms of the agreement, which quite possibly are no longer provided to new bank clients.
It is also important to say that not all banking agreements are subject to extension. Possibility to renew banking agreement of any type is usually agreed upon in advance when concluding the initial agreement.
Extension of the loan agreement
The extension of a loan agreement is similar in nature to debt restructuring, since in both options changes credit relations There is a kind of deferment of loan payments. In essence, the extension of a loan agreement implies an increase in the validity period of an already signed agreement.
Accordingly, if the loan agreement is valid for a longer period of time, this will lead to a significant reduction in the credit burden on the borrower - a reduction in the monthly loan payment. Extension of a loan agreement may well be beneficial to both parties to monetary relations:
- A borrower who, for one reason or another, has difficulty fulfilling his obligations to credit institution. Prolongation, increasing the term of the loan agreement, reduces monthly payment on a loan and allows you to simplify the process of debt repayment;
- To the creditor. First of all, by reducing the credit burden on the borrower, the creditor organization has the opportunity to judiciary get loan funds back. In addition, by increasing the term of the loan agreement, the financial organization will be able to receive additional income.
The good thing about prolongation is that, unlike credit holidays, the burden on the borrower will be distributed evenly until the end of the already extended loan agreement.
The only relative disadvantage of prolongation can be considered the need to pay additional interest to the bank for using credit funds. If the term of the loan agreement is extended, interest on the loan will have to be paid over a longer period of time, and the total overpayment on the loan will increase.
You should also know that financial organizations Our country is not ready to extend all loan agreements. For example, it may not be profitable for a bank to delay for ten years loan agreement with a small amount of debt. Extension is possible only on mutually beneficial terms for the lender and borrower.
Receiving a positive decision on issuing a loan also cannot guarantee the borrower that the loan agreement can be extended at any time convenient for him. Questions about the possibility or impossibility of prolonging such contracts should be clarified in individually.
In any case, if difficulties arise in fulfilling obligations to financial institution If it is necessary to extend the loan agreement, it is better for the borrower to openly talk about this with representatives of the bank.
Zapsibkombank values open and direct communication with its borrowers. Bank employees, if necessary, calculate several possible options debt restructuring, offer to issue a credit holiday, or are considering the option of prolonging a specific loan agreement.
Zapsibkombank is interested in the success and stability of each of its clients. That is why the bank is always attentive to the problems of its clients, who are ready to work together to find ways to solve them.
Most borrowers try to pay off debts promptly to avoid paying too much interest. However, sometimes people are interested in the opposite, that is, in extending the contract. Loan extension can help out in situations where solvency has sharply decreased. Due to the longer repayment period, the regular payment becomes less significant, so even with low income, the money will reach the loan account on time.
What is an extension?
In the financial sector, the possibility of prolonging a deposit is often encountered, but with the extension of a credit transaction, the situation is not so simple. By default, contract renegotiation occurs quite rarely. It can be used in areas related not to one-time lending of money, but to services that involve financing in the form line of credit. These in the retail sector may include credit cards and overdraft. At the same time and for them credit limit will not always be available during the next period - for this, the contract must contain a corresponding clause.
For regular cash loans or for targeted programs, debt can be extended only on an individual basis. Such measures can be taken as part of loan restructuring, that is, when revising its terms. Accordingly, the extension will not automatically be equal to the previous term - it all depends on the amount and circumstances in which the client finds himself. It is not easy to obtain the bank’s consent to prolongation, but if you service the current loan without violations, you can hope for the favor of the lender.
How to take advantage of the loan agreement extension?
There is no specific algorithm for processing a loan extension, since all banks have their own rules. Nevertheless, a pattern can be discerned in them. If circumstances force you to look for ways to reduce your credit burden, you can proceed as follows:
Talk to a bank employee. This will help you find out whether it is possible to postpone payment of the loan for a new term.
Collect documents. Valid reasons for prolongation may include health problems, dismissal from work at the initiative of the employer, or the birth of children. All of them must be confirmed by certificates, certificates or other documents.
Apply for extension. Even if you have received a preliminary refusal, it is better to contact the bank in writing and receive an official response.
Create a new payment schedule. When the parties have agreed on a new payment regime, it is necessary to adjust monthly amount— it will be less depending on the period.
Banks are not too willing to extend a loan, but in a hopeless situation for the client, they sometimes prefer to meet halfway rather than bring the matter to a delay and trial. In addition, debtors in distress always have another option - turning to other financial institutions. Refinancing a loan with another bank also allows you to extend the term, and getting a loan to repay an existing loan is not at all difficult.
Many of us take out large loans to solve pressing issues. With the help of borrowed funds, we make necessary purchases and make urgent payments. A loan helps you get out of difficult situations, but the time comes to repay your debts. There's a lot in life unforeseen situations, and not everything we can foresee, so it happens that there is no opportunity to pay off debts on time. However, if the borrower is conscientious and treats his obligations responsibly, it is in the interests of the bank to make him an indulgence. And the lender may well agree to extend the loan.
What is a loan extension?
The word prolongation comes from the English "long". Accordingly, its meaning can be defined as an extension, and in relation to lending this will imply an extension of the loan period. Whenever financial problems For a conscientious debtor, the bank will most likely agree to an amicable solution, and, after its own assessment of the situation, may extend the loan. However, creditors make such concessions when a large sum borrowed money, most often when applying for a mortgage. Often the opportunity to extend the payment period is stipulated directly in the loan agreement. In addition, in order for the lender to extend your debt, you need to prove yourself from the best side. in such cases, the opinion of the lender as a whole will be more important than the purity of your loan. The reasons for carrying out such a procedure must be compelling - it will be much easier to agree on an extension if low solvency is documented.How to roll over your debt?
Loan extension is carried out taking into account the individual situation of the client: it is taken into account how much it actually financial situation difficult. Perhaps the person acted irresponsibly and did not think about the consequences of paying the debt. In order to extend the loan repayment period, you will need to contact the bank branch with a corresponding application and attach an identification document, as well as a certificate of income. Such an application will be considered within several days, after which, if the answer is positive, an additional agreement will be concluded with you, which will indicate new conditions for paying off the debt. For those borrowers who are approaching retirement age, the lender may set age restrictions at the time full payment debt. In addition, it is important to remember that you can apply for an extension of the loan repayment period only once during the term of the loan agreement.The ideal option for repaying a microloan provided by an MFO is timely payment within the stipulated period. But what to do if right now you cannot pay off your debt in full? In this case, such a common service as loan extension will come to the rescue (it is also often called prolongation), the availability of which is considered “good form”. Let's consider what the essence of this procedure is and how to implement it.
Microloan extension: what is this service?
The economic term loan extension means extending the term of its payment. In other words, the repayment of the microloan is postponed to a later date. This can be either a recalculation of payments with adjustments for a changed time period, or payment of the full amount of the debt along with interest before the specified date.
Prolongation and deferment are completely different concepts and should be distinguished. Deferment allows you to postpone payments for some time without financial losses: the overpayment will not increase. And only some banks provide free services. MFOs, due to the specifics of their work, can only extend the time of using a loan for financial compensation, i.e. interest will have to be paid without changes (something like credit holidays from banks). Although some microcredit companies in some cases will not refuse to grant their client a deferment.
When does an MFO provide an extension?
When applying for a microloan, you must be notified of the possibility of extending the loan if problems arise with timely repayment of the amount. True, this service is not provided by all microfinance organizations, so if there is no mention of extending the loan term, it is worth clarifying this issue - do not hesitate to ask any information you are interested in from the organization’s employees directly or through an online form on the website (at the same time you will learn about the degree of loyalty of the microfinance organization to its client ). And if temporary financial difficulties prevent you from paying off your debt, warn your lender about this and use the extension service.
The credit institution can clarify what circumstances prompted you to take this step (but this happens very rarely). The main reasons for clients to contact microfinance organizations to extend a loan are:
- temporary stay outside the country;
- temporary financial difficulties;
- loss of a source of income or its unexpected decrease (downsizing, dismissal, etc.);
- illness with hospitalization;
- suspension entrepreneurial activity to expand your own business or reorganize.
Most microfinance organizations do not ask questions about why you needed to increase the repayment period of the microloan. But if it sounds, tell the truth without concealing information, so you can count on a positive outcome of the appeal.
How does a loan extension work?
The extension procedure begins after contacting the microfinance organization in the appropriate section of the website (usually it can be “activated” in personal account borrower) or by telephone. You can also make a personal visit to the office (not all companies can do this via the Internet).
Each organization puts forward its own conditions, but most of them are similar in the following:
- The loan extension period is up to 30 days;
- The number of renewals may be limited (up to 10-15 times or within a year). Some companies do not limit the number of uses of this service;
- After signing the loan agreement, at least a few days must pass before it becomes possible to extend it (usually 3 days);
- Only the loan amount (its body) is subject to extension;
- To extend the repayment period (offline - in the office), contact the same specialist who lent you (this is, rather, speculation among borrowers, since people tend to contact an employee they already know, but we have never encountered such an instruction in the rules for granting loans or in contracts);
- Extension of microcredit (CI) is not provided. If you decide to correct your CI and have taken advantage of the corresponding programs in a number of microfinance organizations, then one of the conditions for completing such a program is repaying the loan on time. You want to prove your integrity? ;
- To reduce the financial burden, you can contribute not only interest, but also part of the principal amount (or pay a fee).
How much does it cost?
Let's say a few words about the financial side of the issue. Yes, no one will give you the opportunity to extend your microloan for free (do not confuse it with a deferment, which is much more difficult to obtain). Typically, the borrower must pay the current interest accrued on the maturity date, such as in , after which the loan will renew. On the end date of the extension, you must repay the loan body and interest accrued for the extension period (or just interest and order the service for a new term).
Some companies ask to pay off interest and part of the debt before the procedure takes effect. For example, they want to receive 10% of the loan amount plus interest.
Others also charge a commission for each day of service - they want an additional 50 rubles for each day of extension. But, for example, it does not require paying interest for the service, but before activating it, it will charge a commission approximately equal to the interest on the loan for the entire renewal period.
Sometimes an organization can automatically extend a microloan (and a number of others) - this can happen if you take out. On the last day of the microloan, the amount to pay for the loan is automatically debited from the borrower’s card account (and this happens - read the reviews on the Finance for People website!) and if it is not enough for full repayment, then the extension service is automatically activated (if, of course, there is money there is enough on the map for this).
In any case, before the procedure, find out the amount of the reward and carefully consider whether to take this step or make the payment on time.
Pros and cons
For MFOs, prolongation is not an indicator of unreliability; on the contrary, it characterizes you as a responsible and conscientious client. This service has the following positive aspects:
1. If you lose your source of funds to pay off your debt, you don’t have to worry and urgently look for money: just contact the company for an extension.
2. By using the microloan extension service, you do not spoil credit history and retain all the benefits of an internal client of the MFO. In fact, you are given a legal deferment, i.e. In order not to ruin your credit history, you will have to pay, relatively speaking!
However, there is a downside to extending the repayment period of a microloan: the service is paid and significantly increases the final credit amount. Of course, it is beneficial for microcredit companies to prolong loans: this way they receive both the amount of the debt and a significant reward in the form of additional accrued interest. At the same time, we note that extending loans is justified in cases where there really is no funds for full repayment.
Our advice: apply for a loan extension only in an emergency, so that the loan does not turn out to be too expensive. But if financial troubles arise, prolongation is the only right solution in order not to get on the “black list” of clients with debt, not to spoil your credit history and to continue to cooperate fruitfully with microfinance organizations and banking institutions.