The client, signing the loan agreement, undertakes to pay the loan regularly every month. He does not think that circumstances may arise in his life that may prevent this. Such situations often occur during mortgage payments, since the contract is made for decades. Such circumstances can be: loss of work or delayed wages, loss of a family member, unexpected injury or illness. Failure to receive credit funds to a bank account will be regarded by the bank as an overdue payment.
Penalties for arrears charged by the Bank
The bank, in turn, when a client has a delay, charges penalties and interest. These actions are legal under Article 330 of the Civil Code of the Russian Federation. Recovery from the client is of two types:
1) Fine – a fixed amount specified in the contract. It may vary depending on what the account arrears.
2) Penalties – charged for each day of delay in the amount of the interest rate, which is specified in the contract. This interest rate differs from the rate of the loan itself, sometimes several times.
Client actions in case of delay
First of all, the client must contact the bank. Very often organizations go to meet borrowers in difficult life circumstances. After reviewing the statement indicating the reasons and the attached evidence, banks can reduce the payment by increasing the schedule, or give a delay for a period of time. In some institutions, there are “credit holidays” – the possibility of deferring payments without affecting the customer’s credit history.
The second possible option is to refinance a loan in the same bank or another. The essence of this program is that one loan is closed by another at a lower interest and a longer period.
Starting in 2015, the opportunity to write off debts on a loan appeared in Russia. In this case we are talking about bankruptcy of the client.
Important! You should not refuse registration of insurance programs attached to the loan agreement. Very often, clients neglect this possibility, considering it to be an overpayment. And in vain! In the event of an insured event, the insurance company can either partially or fully close the loan.
Consequences for the client in case of late payment of the loan
All credit organizations transmit customer solvency data to the Credit History Bureau (CII). Therefore, if the borrower has a delay, and he is not in a hurry to contribute, this information will go to the bureau. Therefore, it is better to make at least part of the debt and gradually pay the entire amount than to spoil your credit history.
Starting from the first day of delay, the customer will receive phone calls and SMS from the bank with payment reminders. If the period of non-payment exceeds 3 months, the bank will first connect its collection service, and later may sell the loan agreement to collectors or go to court. Employees of collection services communicate not only with the client, but also with guarantors, and can also travel to the addresses specified in the contract. When applying to the court the case is likely to win the bank, and the debtor will have to pay the entire loan with penalties (an account will be charged for the work of the bailiffs – withholding amounts from the accounts and selling the property).
The most important thing in case of a delay is not to hide from the bank, but on the contrary, to try to solve the problem together with the employees. Sometimes it’s worth asking someone to borrow money from a friend and close the delay on a short term rather than get into a “financial hole”.