The decrease in monthly income, unemployment, occurrence of an accident or other situations that can affect the ability to work for a particular period are unforeseen situations, which could influence a person's possibilities to repay a loan. The National Bank of Moldova (NBM) explains to the citizens how they can overcome such a crisis and what measures they should take, IPN reports.
According to the central bank, in these situations, the payment of the initially assumed installments on the loan can become difficult to bear, and the first step is to contact the bank from which the loan was raised. From the moment the loan becomes overdue, the bank is much less flexible to accept remedial measures, and waiting in this case is the worst thing.
When loan is to be repaid, it is important to monitor inflation. According to the practice in the banking system and according to the NBM's monetary policy objectives, when inflation increases, the base rate also increases, which leads to an increase in interest rates on loans. In such cases, it is important to check the conditions of the loan agreement and consult with financial specialists.
The NBM specifies that, depending on the problems, the bank could accept the rescheduling of the loan. This process is similar to that of loan approval and could take more time. However, if the lending bank is unable to reschedule the loan, there is still enough time to examine alternative refinancing offers. The most important thing to remember at this point is that no other bank will refinance an outstanding loan.
If the financial difficulties are temporary, the NBM recommends reducing current expenses, negotiating with the bank so as to reschedule the repayments and identify a temporary financing solution, such as a loan from relatives or friends.
If the exact period of financial difficulties is not known, it is recommended to identify assets that are not considered essential assets, such as a car or an ancillary property to be put up for sale. Thus, there is the possibility of paying part of the loan early, and in the time gained the bank will review the schedule and reduce the monthly installments, keeping the same payment period.
If the apartment or another property was pledged and there is no prospect of increasing the income in the near future, this should be better sold and cheaper property should be bought. With the remaining money, the loan can be paid in full or in part.
If no solution is identified and the stage where there is no possibility to pay is reached, the bank can initiate such processes as taking possession of the pledged asset and putting it up for sale without the owner's participation. At the same time, when the loan becomes overdue, the bank will calculate penalties.
On the other hand, the NBM does not recommend the people who have problems paying the loan to bank on the fact that, after the loan becomes overdue, they will be able to negotiate a new schedule with the bank. At the same time, it is not recommended to take out a new loan to pay the installments on the main loan.
The information was presented within the National Financial Education Campaign, carried out with the assistance of USAID (MISRA) in cooperation with the National Bank of Moldova and in partnership with the Independent Think Tank "Expert-Grup".
