Non-bank loans in our country have been experiencing a big boom in recent years, and the number of people in debt and the high demand for this type of loan is constantly increasing. One of the services that these companies offer to their clients is the possibility of extending the loan maturity. At first glance, this is a good thing, and for many people it is a kind of rescue when, for whatever reason, it fails to pay its commitment on time.
On the other hand, such a loan is heavily expensive and the only one who profits from it is a loan provider who earns very decent money on frequent extensions. Moreover, it is no exception that some people prolong one credit repeatedly and eventually overpay an unnecessarily high amount.
How does extending the loan maturity work?
First of all, extending your loan is never free, but you have to pay the appropriate fee – usually in advance. As this option is offered mainly by non-banking companies, the extension is activated simply online – the client logs in to his / her account, asks for an extension of his / her maturity, pays a fee and gets an extra time to pay. Often it is possible to extend the loan repeatedly, but then such a loan is very disadvantageous and only the provider, not the client, profits from it. In addition to an online extension, a request for postponement of the due date can often be arranged via a telephone line.
When does it make sense to extend the due date?
In some cases, extending the maturity of the loan is worthwhile – if you do not really have the money to repay the loan, nor do any of your loved ones lend it to you, the extension is definitely better than resigning and not communicating with the credit company – in this case you are facing fines and penalties that can exceed the amount you borrowed many times.
Why do loan extensions not pay off?
In general, however, extending the loan maturity is a bad solution, and given that non-bank loans have high interest rates in their own right, you are already paying a lot in the event of extensions. It is a big mistake to rely on your credit to be extended and paid later – if you already know in advance that you will have the problem to repay the loan on time, do not even take it and try to approach someone from your family or good friends.