Credit holidays are an excellent proposition for all those who want to take a break from paying the installment in a given month and use the saved funds for another purpose. This option is possible in a situation where we have diligently repaid subsequent installments of our commitment. The bank will usually accede to our request and will freeze repayment of the upcoming installment. It will be spread out in the new loan repayment schedule.
Temporary suspension of repayment or credit holidays
Most banks offer their clients the option of freezing one installment per year . The condition is systematic repayment of liabilities and no delays. Credit holidays can be used in any situation, e.g. when we need additional funds to buy a car or a holiday trip. The overdue installment will be included in future installments , which of course means that the cost incurred in the following months will be slightly higher.
A loan grace period is a slightly different solution. Usually, suspension of repayment applies to customers who have temporary financial problems. The bank wants the client to regain financial liquidity and be able to pay his debt back. The lender therefore decides to temporarily suspend all or all of the installments. A new repayment schedule is created that includes frozen installments . Another option may be to extend the deadline. In this case, the monthly installment will be reduced.
How to apply for a loan repayment grace period?
With this matter, it is best to go to the bank and discuss individual grace conditions with a consultant. If in the past we had no problems with repayment, the bank will gladly accede to our request and will temporarily freeze the repayment. It is slightly easier with credit holidays. In some banks, each customer can bypass the payment of one installment once a year, and transfer the payment to the following months. In both cases, it is worth visiting a bank branch at least a week before the next installment.
During your grace period, you don’t have to make any payments on your student loans. Your lender may apply your payments directly to your principal balance. You may pay more in interest over the life of the loan than if you had made payments during the loan’s grace period.