czym są wakacje kredytowe

What are credit vacations and is it worth using them?

A credit vacation will allow you to catch your breath when loan and credit installments become too much of a burden at some point. This can be a consequence of job loss, illness or even rising interest rates on loans. What exactly are credit vacations, what should you know about them and what costs do they entail?

What are credit vacations?

A credit vacation is a kind of break from the need to pay installments on loans and credits taken out from various financial institutions. Importantly, credit vacations can be opted for regardless of the type of obligation, so both in the case of consumer loans and targeted loans such as car or housing loans.

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The purpose of a credit vacation is to prevent default on either the loan installments themselves or other non-financial obligations. A break of several months, caused by an agreement with the institution, will allow you to catch your breath and stabilize your personal finances.

When is it a good idea to take a credit vacation?

Credit vacations are most often used in situations where the borrower is unable to make timely payments. As we wrote in the introduction, this can be either loss of job, illness or another force majeure circumstance.

This does not mean, however, that a credit vacation is not possible, for example, if you want to make certain investments, such as a renovation or the purchase of household appliances/RTVs, but even to go on vacation or meet other needs. However, it should be remembered that credit vacations are not free, which means that the total cost of the loan will increase, and the break in repayment will not always apply to the entire installment, which will be discussed in a moment.

credit vacation
Credit vacations will allow you to catch a breather from installment payments. Photo: DAPA Images/Canva

Credit vacations can also be useful in a situation where the National Bank of Poland raises the value of interest rates, which affects the interest rate on loans and, consequently, the amount of monthly installments. In such a situation, a credit vacation will allow you to diversify your obligations, arrange a plan for the coming months and pay installments more lightly in the future.

Statutory credit vacations

Free credit vacations were in effect during the pandemic period and applied to all borrowers regardless of the type of obligation. The government then extended a helping hand to Poles and ordered banks to implement the ability to apply for a temporary suspension of loan and credit installments. The maximum period for which loan installments could be postponed was 3 months.

The snag was that the statutory credit vacation could only be used once, and most people took advantage of this opportunity at the very beginning. The deferred loan installments were usually moved to the end of the loan agreement, which means that in this way the repayment period of the borrowers’ incumbent obligation was extended at the same time. Statutory credit vacations were not recorded in the Credit Information Bureau and had no effect on credit scores.

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Importantly, statutory credit vacations applied to both the principal and interest portion. This means that borrowers did not have to make any payments during this time, except for possible insurance premiums, which are often “bundled” with loans.

How much do credit vacations cost?

In addition to statutory credit vacations, virtually all banks in Poland provide their customers with the opportunity to take advantage of deferred loan installments for many years. Usually it is a three-month period, but it all depends entirely on the bank’s policy.

If you are interested in taking a credit vacation, you should expect that it will not be without additional costs, which include both an application processing fee and the interest rate itself, which will increase, due to the simultaneous extension of the repayment period.

Credit vacations usually involve paying the interest portion of the loan during this time, which, with fresh commitments, can amount to as much as 70 percent of the installment value.

How to take advantage of a credit vacation?

Taking advantage of a credit vacation requires submitting an appropriate application to the bank or institution where you have an active credit commitment. It is best to contact a bank employee about this beforehand, for example, by calling the hotline. You have to reckon with the fact that the institution will want to know the reasons for which you are postponing installment payments, which is not worth hiding.

Many commercial banks in Poland make applications for loan installment deferment available in their transaction panels, which can make the whole procedure much easier and reduce it to just a few clicks. It is worth noting, however, that each application is considered on an individual basis, and institutions are not obliged to grant credit vacations to everyone interested. The most common situation with a refusal is when the loan is repaid for a very short time, and the financial institution does not yet have confidence in us.

We should also remember that information about taking a credit vacation will be recorded in the Credit Information Bureau, which can derail the chances of taking on other obligations at that time.

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