Extension of a loan agreement, the repayment period of which has become unrealistic due to changed circumstances, often becomes the only solution in a seemingly hopeless situation. The extension of a loan agreement, the repayment period of which has become unbearable, is especially relevant for borrowers who, before the crisis, took large sums from banks, for example, to purchase an apartment.

Extension of a loan agreement: the repayment period can be changed

What is a loan agreement extension? This is a renewal of an existing contract for a longer period. When re-registering, the period for repayment of the entire loan amount is “pushed back” by several months or even years.

Why might it be necessary to defer payments on mortgages and other types of loans?

A deferment may be required if the borrower’s financial situation has changed since taking out the loan. It doesn’t matter what the reason was: dismissal, salary reduction or illness. What matters is that the borrower's circumstances have changed fundamentally. He can no longer pay the loan. However, he is still responsible for non-payment of the loan.

Violation of loan repayment terms causes many troubles. The bank increases the interest on the loan. Bank representatives constantly remind the borrower of their obligations and threaten to take the case to court.
If the borrower continues to persist, the bank has the right to demand that the guarantors return the loan. In accordance with current legislation, guarantors, like the borrower, are responsible for repaying the loan (see failure to repay the loan by the guarantor).

Deferment of loan repayment is a good solution for all interested parties: the bank, the borrower and the guarantors. One question remains: how to defer loan repayment? Will the bank agree to renegotiate the terms of the loan agreement?

How to defer loan repayment?

In order to defer loan repayment, you must contact the bank with a request for an extension. If you provide convincing evidence of a deterioration in your financial situation and prove that the state of your finances has deteriorated due to reasons beyond your control, the bank will most likely agree to reconsider the terms of the agreement.

When prolonging the loan agreement, the loan repayment period increases, and the monthly payment, accordingly, decreases. True, along with the increase in the repayment period, the overpayment also increases - after all, in this case, interest will have to be paid much longer.

The bank’s decision to extend the loan agreement is formalized by a special resolution. The points that this resolution contains: extension of the loan agreement, repayment period, monthly payment amount, interest on the loan, etc.
There are no hopeless situations. Banks are no less interested in repaying the loan than the borrower, so in the vast majority of cases they agree to debt restructuring. Thus, the borrower gets the opportunity to pay off debts without lengthy proceedings and resolution of the conflict in court.

Today, there are a large number of credit options that help the borrower pay off debt in difficult times. The same applies to loan extension. Simply put, this is an upward change in the terms originally specified in the contract.

What is a loan agreement extension?

The term “extension” refers to the procedure for changing the deadline for the return of money by the client. Those. If necessary, the borrower may have the loan repayment period extended. This will allow you to avoid delays, deterioration of your credit history and other negative consequences of a lack of funds to fulfill your debt obligations.

Loan extension and its types

Loan extension directly depends on the following criteria:

• the amount of salary the client receives monthly;
• stability of debt repayment;
• the presence or absence of additional income;
• financial reputation of the debtor;
• reasons for extending payments, etc.

Depending on the situation and factors, experts define two types of extension. The first shifts the internal deadlines for payment of funds, the second postpones the date and amount of the last payment for some time. For example, you signed, indicating 12 payments in installments. The latter should be in the amount of 10,000 rubles on June 12, 2018. The remaining payments are made on the 12th of each month in the amount of 8,000 rubles.

In the case of the first extension, the amount of the standing payment and the timing will be changed, but the last one must take place exactly on June 12, 2018 in the amount of ten thousand rubles. In the case of the second option, you can change all dates and amounts, including the last one - June 12, 2018.

How to apply for an extension

An application for loan extension is signed by the financial institution that issued the loan. To do this you need to have with you:

• passport;
• a document that allows you to request a change in the payment period (certificate from the hospital, place of work, etc.).

It is worth noting that sometimes a package of documents may consist of several certificates: about income, about the amount of wages, about additional earnings, from the employment fund, and a work book. A sample application is provided by bank employees. They are also required to provide detailed information about the procedure, possible changes, etc.

An increase in the loan repayment period is available only if you have good reasons for this, supported by documents. This may include job loss, salary reduction, illness, etc. Much also depends on what kind of loan you received, as well as your intentions. Those. if the bank sees that you were repaying the loan regularly before the problems with fulfilling your obligations, most likely the request for extension will be granted.

In other words, holders of a good CI have a greater chance of getting a deferment. Typically, an extension of the contract term is issued when a large loan has been taken out. Sometimes the possibility of delay and its conditions are discussed during the conclusion of the transaction. As a rule, with an approving verdict, the client and the lender additionally sign an agreement, which reflects the new conditions for repaying the loan.

Loans are considered to be 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 assess his financial capabilities to transfer a specific amount to the bank every month. 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 of debt through bailiffs or debt 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 proceeds. 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;
• providing 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! This opportunity is offered 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 a prolongation in the future is indicated. If the document does not contain 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 for prolongation is the ability for the borrower to prove that financial difficulties really exist, and that they 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 renewal process, a complete package of documents is necessarily collected, which includes:

• passport and TIN of the payer;
• certificate received from the place of employment;
• documents confirming the occurrence of a specific incident that led to a deterioration in the financial situation of the 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 is considered beneficial not only for payers, but also for the banking institutions themselves. It is recommended to request this service before the actual delay occurs, since in this case the payer’s credit history will not deteriorate.

INTRODUCTION

Today, the economic situation in the country does not have a strong foundation. The national currency exchange rate changes every day, creating certain financial difficulties. Since credit institutions had issued a large number of loans even before this situation, and now some borrowers will certainly have difficulty paying their obligations, it is very important for banks to show their clients that they are willing to make some compromises. After all, it is better for the client to fulfill his obligations with some reservations and not exactly on time, but nevertheless to fulfill them, than to stop contacting the bank and the debt will not be repaid. Thus, the purpose of the study of this essay will be ways to “help” clients, namely loan extension.

THE ESSENCE OF PROLONGATION

If the borrower has temporary financial difficulties that arose for objective reasons and it is impossible to repay the debt on the loan within the period established by the loan agreement, the bank may, in some cases, provide the borrower with a deferment of debt repayment with a change in the loan repayment term, provided that the borrower has no debt on accrued interest. Extension of the loan repayment period is formalized by an additional agreement to the loan agreement. The issue of loan prolongation is resolved taking into account the NBU regulations on the procedure for the formation and use of reserves to compensate for possible losses on credit operations of commercial banks. In this case, the following must be taken into account:

• 1. Availability of credit resources, their cost, as well as compliance with repayment terms. Extension of the loan repayment period is carried out based on the request of the borrower.
• 2. The period for which a commercial bank institution can extend loan repayments is determined by the commercial bank institution that provided the loan, but no more than 6 months for long-term loans and no more than 3 months for short-term loans. Extension of a loan for specified periods should not be applied in the entire amount at the end of the term, but preferentially distributed in parts during the extension period.
• 3. The debt on such a loan is charged to a separate account for accounting for prolonged debt on loans. When deciding on a prolongation, a commercial bank institution can view the level of interest rate for using a loan. The decision to extend the loan repayment period with a change in the repayment period provided for in the loan agreement is made by the credit committee of the commercial bank institution.

If the borrower makes payments on a short-term loan in installments and during the term of the loan agreement he has experienced temporary difficulties, as a result of which he cannot repay individual (partial) payments on the loan within the terms provided for in the loan agreement or schedule, the bank may postpone the repayment dates for individual payments , which are not ensured by timely return, at a later date, but not later than the deadline for repayment of the debt provided for in the loan agreement. It is possible to make such payment in installments within the term of using the loan stipulated by the loan agreement. In this case, the amount of payment that is not ensured by return on time is distributed evenly over the remaining terms.

Deferment and installment payments of individual payments on a long-term loan can be carried out with repayment of the deferred or installment amount within 12 months from the date of granting the deferment or installment plan, but no later than the period established by the loan agreement.

When providing a deferment or installment plan for individual loan payments without changing the deadline for its repayment stipulated by the loan agreement, bank institutions must take into account the client’s ability to mobilize funds to repay the debt in new terms and in increased amounts. Changes in the terms and amounts of payments should not increase the risk of non-repayment of the debt. Such debt is accounted for in the same accounts (not transferred to separate accounts of extended loans).

You also need to remember that loan extension is often not a free procedure. The bank may charge a fee, which usually depends on the amount being extended and the period for which the loan is extended. Also, increasing the term of using a loan in some banks may be fraught, in addition to the commission, with an increase in the interest rate. Especially with prolongations of the second type. All this can be stated in the loan agreement, or maybe simply in the bank’s internal instructions.

In general, to negotiate with a bank you need to clearly:

• 1. know the amount and extension period
• 2. be able to explain the reason for the extension
• 3. know renewal fees and the risk of interest rate increases

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 prolongation in the financial sector is usually called 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. Indeed, with the automatic renewal of agreements that neither party wished to terminate at the end of the initial term, the client does not have to waste time visiting a bank branch and 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 agreement, is an extension of the validity period of previously concluded agreements on the same conditions, with the same terms of validity of the agreement, with the same amounts of payment for banking services. The main advantage of renewable contracts can be considered:

• Significant savings in your own time;
• Preservation for a new period of contract terms favorable to the client, which quite possibly are no longer provided to new clients of the bank.

It is also important to say that not all banking agreements are subject to extension. The ability to extend a 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 for changing 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 a credit institution. Prolongation, increasing the term of the loan agreement, reduces the monthly loan payment and simplifies the process of repaying the debt;
• To the creditor. First of all, by reducing the credit burden on the borrower, the creditor organization has the opportunity to get the loan funds back without involving the judiciary. 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 may be the need to pay additional interest to the bank for using loan 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 institutions in our country are not ready to extend all loan agreements. For example, it may not be profitable for a bank to delay a loan agreement for ten years 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 on an individual basis.

In any case, if difficulties arise with fulfilling obligations to a financial institution, or 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. If necessary, bank employees calculate several possible debt restructuring options for their clients, offer to issue credit holidays, or consider 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.