An overdue loan is one of the most unpleasant situations that a client of microfinance organizations may fall into. Each person may experience circumstances when he is unable to pay off his debt on time, and an overdue payment by itself does not mean that the client is a malicious non-payer.
However, for microcredit services the reason for the delay is always not obvious. The fact is that all the data on cash flows are analyzed by automatic systems – they give out dry data on the size and terms of debt. It is with these data that collectors begin to work.
But there is good news. If it’s difficult to agree with an automatic computer system, then specialists from customer support will probably meet you. And most likely they will offer you to issue a restructuring of a loan to an individual.
What is the purpose of restructuring?
First of all, we will determine the terminology.
Restructuring is the changes and amendments that are made to the contract between the microfinance organization and the client. These changes report to the amounts and maturities of current debt. In other words, this is an extension of the restructuring loan – the remaining amount that you must return to the lender is divided into equal parts and distributed for a certain period of time during which you need to make a monthly payment.
Restructuring debt on a consumer loan by the extension method is one of the most comfortable ways for a client to pay off a debt. But there are other types of credit restructuring – for example, refinancing, that is, repayment of a loan in one organization due to the loan received in another organization.
How to restructure a loan?
As a rule, we are talking about restructuring in cases where the delay is already quite large and lasts from several months to six months. By this time, large interest has already been accrued, and paying off the debt is completely quite problematic. In such cases, the companies providing the loan themselves turn to the client with a proposal to formalize the restructuring.
However, it is better not to bring the situation to such cases. Even if your debt is still not great, but you are not sure that you can pay it off in the near future, the best solution would be to inform your lender. You may be able to agree on a minimum penalty fee. For example, microfinance company completely stops the calculation of penalty interest for the period of debt restructuring.
Unfortunately, not all financial institutions agree to arrange a restructuring in such a way that it is comfortable for the client to pay off the debt. For example, large banks put forward their conditions, not taking into account the personal circumstances of their debtor. If the amount of debt is large, then it can take up to 45% of the average monthly income to pay off.
Things are fundamentally different if you contacted an online lending service. Firstly, here you can monthly receive the amount you need to repay a loan at a bank or other financial institution. And secondly, the lending conditions in such services are much more loyal to customers, they pay much more attention to the personal comfort of their client.