If the loan payment amount becomes too high for the borrower’s income, then it can reduce the debt burden. In addition, the debtors, whose financial condition has not changed, have an opportunity to reduce the monthly repayment costs.
The article gives advice on how to make debt payments less burdensome for the family budget. It also describes why it is necessary to inform the credit organization about problems with money.
Properly choose a loan
To be able to influence the debt burden after receiving a loan, you must choose it correctly. For this, in turn, it is recommended:
• carefully study the conditions of the product, without missing a single item;
• check with the future lender, according to what scheme you can repay the debt.
If the annuity scheme is used, then the loan payment will be the same throughout the term. Indeed, in the first period of fulfillment of obligations, payments are made mainly to repay interest debt.
A differentiated scheme allows borrowers to reduce the burden associated with making monthly payments. The difference of this scheme is that the debt is repaid evenly – both its “body” and the interest allowance are reduced. Therefore, the payment every month becomes less.
In some banks, loan recipients can choose the type of payment. But credit organizations, as a rule, take their funds back only according to the annuity scheme.
We change the lender
A crucial way to reduce the debt burden is debt overdraft. With this procedure, the debtor can profitably change the terms of repayment. In particular, the refinancing of the loan makes it possible to reduce the rate, and it is this factor that affects the amount of the payment.
In addition, a new loan can be issued for a longer period, which also has a positive effect on the cost of debt repayment.
Loan is a procedure for changing the bank. It includes:
• receiving money from another credit institution;
• full repayment of existing debt.
The borrower takes a new loan and uses it for full settlement with the bank in which he designed the current loan. At the same time, the debt load decreases due to changes in certain repayment conditions – rates, term or scheme.
Debt refinancing is much more difficult than partially repaying. The debtor needs to collect documents for registration of a new loan, and also to solve all problems with the existing creditor.
If the first bank issued money with a security, then the pledge, as a rule, is transferred to a new lender. And also additional security may be required – one more pledge or guarantors.
Partially repay debt
It has a positive effect on the amount of expenses for regular payments and loan repayment in partial form. If the debtor returns part of the loan to the lender, then:
• the size of the principal debt becomes smaller;
• monthly payment decreases.
Credit organizations can not prevent the client’s desire to repay part of the debt ahead of time. In addition, they are not entitled to set the minimum or maximum amount of partial debt repayment. Therefore, each debtor has the opportunity with this method to reduce the debt burden.
But to solve the problem of reducing the payment, you first need to think in advance about where to get money for early repayment of the loan. It is not recommended to use other credit products – this will only increase costs and the risk of debt formation.
Safe and quite effective way is a cumulative deposit. If the borrower, together with the processing of the loan, opens a deposit with good conditions, then by the middle of the term he will already have funds for early partial repayment of the debt.
We ask the bank to restructure the debt
If the borrower’s desire to reduce the loan payment is caused by financial problems, he can try to persuade the bank to change the terms of repayment. To enable customers to cope with debt load after reducing income, credit organizations extend the contract, increasing the term of debt repayment.
Also for this purpose, banks:
• change the repayment schedule;
• reduce the rate;
• change the currency of debt.
Each method helps debtors to continue making payments in conditions of reduced financial opportunities. But to get the consent of the bank to change the contract is not so simple.
To do this, first of all, you must prove that the monthly income is really not enough for a full payment. The borrower must submit to the credit problems department documents confirming the decline in income.
For debtors whose financial capabilities have not changed since the moment of receiving the loan, the banks refused to restructure. In addition, the credit institution will not agree to change the terms of the loan, if the borrower became insolvent on his own initiative – he quit his job.
If there is no money to fulfill obligations
You should always contact the lender if you have financial problems at the time of debt repayment. If the debtor simply stops making payments and ignores reminders about the need to pay off the debt, then he will be in big trouble.
- First, credit organizations punish defaulters with fines.
- Secondly, non-payment of debt often leads to the fact that banks begin the procedure of collection.
Timely contacting the department that deals with problem loans allows the borrower to also avoid:
• sales of collateral;
• deterioration of credit history;
All delinquencies are recorded both in the general file and in history in a particular bank. Therefore, inaction may result in a bad reputation for the debtor.
In turn, when the borrower immediately informs the lender that his income has become significantly lower, the latter offers certain methods for solving the problem. In particular, banks themselves often act as initiators of debt restructuring. After all, credit organizations are also interested in maintaining the contract and good relations with the client.