When a person decides to apply to a credit institution, as a rule, he/she expects to repay the loan on time and does not think about possible circumstances that might prevent him/her from doing this. But anything can happen: holidays, unforeseen expenses, the need to pay off old debts, failure to pay wages on time. In such a situation, the opportunity to increase the period of using the loan may be the only way out so as not to become a debtor. Aspiring to enter the position of clients and keep their credit history, payday lenders have developed favorable conditions for extending the loan. In this article, we will have a closer look at the benefits of extending the loan and the terms of connection of this service.
What is the Loan Extension: A Clear Picture of It
Loan extension is a service that allows you to extend the period of use of credit funds for a certain time, established by the creditor or by agreement of the parties. The service is provided by the lender (bank or non-bank financial institution) free of charge or for a fee. As a rule, prolongation of the loan contract is available for connection during the entire crediting period before the date of payment of the loan prescribed in the contract. How to get a payday loan extension? Some services offer the possibility of extending the loan even after the final repayment date specified in the contract.
For example, in some companies, after the maturity date, the user is offered a grace period that lasts for 3 days. The borrower has the opportunity to extend or pay the loan in full, without accruing interest on penalties. An important point is also that prolongation of the loan term does not affect the credit history in a negative way, but on the contrary it allows to keep it and keep the rating at the level. When the extension is in effect, the standard terms of the loan are in accordance with your contract. Unlike the delay, when you roll over, you will not be penalized, and prolongation will not affect your credit history.
As a rule, prolongation is very convenient for customers, since it saves time considerably. After all, with automatic renewal of agreements, which neither side wanted to terminate at the end of the initial term, the client does not have to waste time visiting the bank’s office, re-issuing documents.
Prolongation can also be non-automatic, formalized with the help of a separate supplementary agreement. In some cases, the prolongation of an existing contract can be carried out regardless of the consent of the parties – in accordance with the norms of the law, say, in the event of the emergence of certain circumstances that have signs of force majeure.
Prolongation, in contrast to the renegotiation of a contract, is the extension of the validity of previously concluded agreements on the same terms, with the same terms of the agreement, with the same amounts of payment for the lending service. The prolonged contracts are often chosen by customers due to significant savings of time, preservation of the terms of the agreement, which are quite possible for the new clients of the bank, for a new term.
What is the Difference Between Rollover and Restructuring of Loan?
Those who are familiar with financial terminology, probably heard such concepts as rollover and restructuring of a loan in a similar context. In fact, to identify these concepts is wrong, and we’ll tell you why. As it has already been said, the lender offers extra time to pay for the loan – the grace period. If the customer has not returned the loan or extended it in the main or additional period, the delay is due. If the borrower is in arrears, the prolongation function is usually not available to him. At this stage, the creditor organization can offer to break the debt into parts and pay it off gradually. This is called restructuring.
This service is not offered by all microcredit organizations, however, on an individual basis, the user can try to agree on the division of the debt and he will meet halfway. To be aware of all the nuances and possible consequences of non-payment of money on time, you should carefully examine the documents before signing them. Those clients who have found themselves in the situation preventing them from paying off can use the credit extension service for a week or two(including the grace period).
If the prolongation is connected in the grace period – the penalty interest is not charged, if after – the penalty for the days of delay is added to the credit body, but the terms of the extension remain the same – you only need to pay interest for the future use. From the 15th day of late payment, clients are automatically offered a restructuring in their personal account and to connect it, without even having to contact customer support specialists.
What Can You Do Wrong Not Having Money to Repay the Loan?
Invalid actions when there is a problem with debt repayment take place quite often. If there is a problem with the repayment of a loan, customers do not contact the microfinance company in which the loan was issued and do not formalize the loan restructuring.
For example, it is possible to extend the loan from 15 to 30 days, which can be issued independently in your personal account. The prolongation of the loan avoids an increase in the interest rate for the loan and an increase in the total amount of the debt. You are recommended that you always use this tool to manage your debt in the absence of money to repay all the credit.
Refusal to pay a loan is one of the worst mistakes you can make. Once in a difficult situation, the client may decide not to repay the loan. Perhaps even the borrower is in doubt, but do agreements on the Internet actually have legal force? When making an online loan, all mutual obligations are fixed in an electronic document and this agreement has legal force in accordance with the Law “On Electronic Documents and Electronic Document Management”. Therefore the answer is “no doubt yes, the loan online has legal force.” The actions of the client in such cases are very predictable – to change or disable the phone number, expecting that the lending company will not make much effort to find it and the situation will be resolved by itself.
This decision only leads to a complication of the relationship between the creditor and the borrower. In such cases, the Company may transfer the loan for collection to the collection company, and also enter the client’s data into the so-called “black list” of debtors in the credit bureau. Information on the “black list” of debtors is available to all banks and microfinance companies and it will be necessary to forget about the debt for new loans. Check your account after the loan is closed.
When repaying a loan, it is possible that the client has paid the full amount in accordance with the contract, and after a while finds out that there is outstanding debt, which is growing rapidly due to penalties.What can you do wrong not intentionally? It is possible that the client performed redemption not through a personal cabinet, but through third-party services. With such payments, the company carrying out the transfer, can transfer to the creditor, a smaller amount, retaining its commission for the transfer.
The payment through the bank branch. The bank payment may come within 3 days, so the creditor will receive the amount to repay the loan with a three-day delay, and during this time the client will be charged interest. Thus, the amount sent is not enough to fully repay the loan.
Therefore, we recommend that our customers first of all implement credit repayment in their personal account from the card or through the terminals of our partners. For the comfort of the customers, the lending company obligatorly notifies its customers about the closure of the credit to the phone via sms and duplicates the message to the email. Be sure to check the information on the status of your loan in your account. If you have transferred the money for repayment in full, and the loan is not closed, call back the support service and you will get the necessary help to sort it out.
Why is Prolongation Beneficial to You and the Lender?
What if you cannot repay the loan on time? Should you renew or roll over a payday loan? In this case, the lender will suggest you to use the service of prolongation (extension of the term of the loan agreement). If you prolong the loan on the last day of the contract, you can prolong it for the maximum number of days – 29. If you plan to use the prolongation service not on the last day of the loan, the period for which you have the opportunity to roll over the loan should be equal to or less than the actual amount days of using the loan. The exact cost of the prolongation can be found in your personal account. Using this function, the borrower has the following advantages:
- a possibility to extend the loan and not go into debt;
- maintain positive credit history and credit rating;
- stay in good relations with the lender;
- protect yourself from obsessive calls with requests to return money;
- avoid lawsuits.
For the creditor organization, the benefits of the prolongation are the following:
- first of all, the proposal to postpone the payment time allows to maintain good relations with borrowers and not lose their trust;
- there is no need to conduct legal proceedings.
Which Terms of the Loan Extension Do Lenders Usually Offer?
Today, a lot of fast money lenders have developed new, maximally profitable conditions for prolongation. The contract is renewed on the following grounds, which may vary from lender to lender, however, in most cases, they differ slightly.
Prolongation is available 7 days before the end of the loan agreement. If the loan is issued for a period of up to 9 days inclusive, the renewal service is available from the 3rd day of use. It can be extended for 7, 15 or 30 days. If you want to extent your loan for the longer period of time, you should ask your lender whether it is possible. Keep in mind that you will need to pay interest for the future period of using money. The cost of prolongation is the amount of accrued interest for the previous period in proportion to the number of days for which the customer wants to prolong the loan. The service of prolongation can be used by every client of our service if your loan is not repaid during 30 days or more than 60 days in total. In the personal cabinet, you can see the cost of prolongation on your loan. For more information you can contact the customer service.
Thus, the amount of payment will depend on the time of renewal and the amount of the loan. Each customer who has activated the renewal service may receive some credit discount. The size of the discount also depends on the period for which the renewal is drawn up. Thus, prolongation makes it possible not only to postpone the loan repayment date but also to receive a discount, avoid problems with the overdue loan, and not to spoil the good credit history.
How to Prolong the Term of the Loan Repayment?
To extend the loan you need to go to the section “How to extend the loan” and choose the most convenient way for you to pay for the extension of the loan. Please note that the renewal service is not available when paying through the cashier or by bank transfer. The money, which will be transferred by you through the cash desk, will be sent to repay the debt (interest, the body of the loan). You are recommended to prolong the loan through the personal cabinet or self-service terminals.
After the date specified in the contract, you will be charged a penalty of about 1.5-3% per day for each day of delay. If you do not manage to repay the loan on time, then you can complete the extension. Prolongation must be formalized during the duration of the contract. If your loan is not repaid within 30 days or more than 60 days in total, then you cannot use the prolongation service, or you can only pay off the debt. You are recommended to extend the loan in advance.
After the date of repayment of the loan specified in the contract, you will be charged a penalty of 3% of the loan’s body per day on a daily basis. However, if you intentionally shy away from the obligation to repay the loan, the information on your debts will be transferred to the credit bureaus, which will negatively affect your future attempts to get a loan from banks or credit companies, and you may be subject to forcible collection methods, including the court trial.
It is also important to remember that not all contracts are subject to prolongation. The ability to roll over a financial contract of any type should be discussed in advance when concluding an initial agreement.