In the economic system, the prolongation of the transaction means an increase in the term of the contract, including a loan agreement. The deferment of the financial liability occurs after the borrower’s appeal to the financial institution.
If the prolongation procedure is prescribed in a loan agreement, the preferential period may be automatically used as needed. For example, after the expiration of the credit card, it can be extended for a certain period, if one of the parties declares the termination of the transaction.
The period of granting funds is initially negotiated by the parties at the stage of registration of the loan agreement. By signing this agreement, the borrower officially agrees with the terms of the creditor.
As a result, a monthly payment schedule is formed, which arrange both sides of the contract. Prolongation will not need if the borrower plans to return funds on time, taking into account interest and other commissions of the bank.
An increase in the term of the loan agreement occurs at the request of the borrower faced with unforeseen circumstances, which significantly affected its solvency.
Often, the prolongation of credit obligations involves an increase in the lending period. It is not about revising the current interest rate. The extension of the loan agreement will allow to meet the needs of both parties. The bank will receive super-profile at the expense of additional commissions, and the borrower will be able to delay payments before the solvency restoring them, and thus will not spoil the credit history.
In addition, an increase in the term of the loan agreement will not affect credit history, which is very important if you plan to take more credit obligations in banks.
Now you know what to do if you have a similar situation. The main thing is to correctly rate the risks, and weigh everything «for» and «against».