When a person gets a loan from a financial institution for the correct reasons, they anticipate to be able to repay it on time, but financial hardships prevent them from doing so. What should I do? Here are some pointers to help you create an action plan to refund credit funds quickly, avoid being alarmed by calls from unknown numbers, and sleep soundly at night.

How to extend a loan?

There are uncontrollable circumstances that are beyond our control. For example, a salary delay, a job change, or relocating to a new location. So, if a person realizes he won't be able to pay back the loan on time, it can be prolonged, which means paying interest while using the loan and subsequently repaying the principle debt. That is, instead of repaying the principal debt, you merely pay interest for its use. Due to the loan extension, the repayment date has been pushed back to allow the borrower to collect the requisite funds.

The possible delay period of payment is negotiated between the lender and the borrower when applying for a loan. Please note that this should be not only in words, but also reflected in the contract. And what about those who have issued a short-term loan, expected to return the money in a week, and did not do it? The penalties come.
 
What penalties can there be?

For each overdue day, a certain penalty will be charged, provided for in the loan agreement. As a result, the total amount may differ significantly from what the client expected when accepting the loan, so it is advisable not to allow this.

Unpaid loans affect the credit history — this is the borrower's dossier on all past and current loans and the timeliness of their repayment.

Refinancing
 
This is another solution that is very popular now. Refinancing is the combination of several small loans into one larger one on more favorable terms. At the same time, monthly contributions are significantly reduced, which may allow you to sort out financial difficulties. Many European lenders  and credit brokers offer this opportunity to their clients. To do this, it is enough to fill out an online application for refinancing.

How do unpaid loans affect your credit history?

Late payments are documented in the customer's credit history and have an impact on their trust rating. For example, if a client has not repaid a prior loan but wants to take out a new one, he may be denied a loan, even from a different financial institution and after a few years. Reason: a poor credit rating shows that the client is untrustworthy.

Keep in mind that the lender calls or sends letters to customers who are in arrears on the loan. And if the borrower does not fulfill the terms of the contract, the lender has the right to recover the debt through the court.

A few tips for the debtor
 
The most important thing we recommend before applying for a loan is that the client calculate the amount he wants to borrow and examine his capabilities to see if he will be able to repay the loan and interest within the contract's time restrictions. Read the loan agreement carefully to avoid being startled by the possible repercussions of late repayment. If the client owes the financial institution money, do not ignore letters or phone calls from the lender and contact him. The earlier the better. Consider the situation where you have lent money to someone who refuses to repay it. How would you feel? It's the same with the lender, try to put yourself in his place. He expects that the money will be returned to him on time.

The main thing is to take a loan wisely. These simple tips will help you pay off your loan debt faster and avoid possible litigation. And remember: borrow only as much as you need. Do not take more, because there is also more to return.