What happens if I have payment problems with my consumer credit?
The request for a consumer credit implies the commitment to pay it plus interest at the agreed time, but it may happen that when the time comes for payment we find ourselves in financial difficulties that make it difficult for us to fulfill our obligation. In this article we will know what happens if we have payment problems with our consumer credit .
Renegotiation of consumer credit
It is possible to renegotiate a consumer credit provided there is agreement between the parties, that is, the bank and the customer. The bank’s decision will depend on your credit policies and the relationship you have with your client. Both the bank and the client must agree to the new credit terms, neither party can make the decision unilaterally.
The renegotiation or refinancing of the credit generates a new obligation, so it may happen that the conditions of the previous credit are modified in terms of interest rate, expiration date, amount of fees or guarantees, among others.
Debt renegotiation is convenient when:
- The total costs of the new debt are lower than those of the original credit.
- The amount of the monthly installment is equal to the original credit but the term is shorter.
- The value of the monthly fee is less than that of the original credit.
- The fact of renegotiating allows greater comfort to fulfill the obligations, according to the family budget.
According to experts, the ideal is to go to the financial institution before going into default and explain that the debt needs to be refinanced since, under current conditions, it is impossible to continue complying with the obligation. In this way, it avoids altering the credit history with negative reports in the risk centers, goodwill is shown before the financial entity and legal charges are avoided.
Can I ask for a loan to pay others?
Sometimes, hiring a new loan is an option to pay other credits or obligations and, thus, consolidate them into a single debt.
This process is known as debt consolidation and is used so that the person can compute their indebtedness, adjust it to their ability to pay and / or take advantage of better market conditions.
In this way, the consolidation allows the payment of the debt to be easier to manage, since, instead of making minimum monthly payments in different accounts, this payment strategy implies obtaining a new credit that covers all the debts of those that are available.
Thus, with the consolidation of debts it is possible to reduce the monthly expense and its administration is simpler because it combines all the debts into one. However, the payment time will be longer and may involve a higher interest rate.
Late payment of consumer credit
When there is a delay in the payment of the debt, the bank may begin charging interest due to default , according to the conditions agreed in the promissory note.
In addition, if the default exceeds 20 days, the bank may demand payment of collection costs , provided that a collection management has been carried out.
Collection costs correspond to the collection of extrajudicial collection of an obligation due and not paid on the date established in the contract. These expenses are stipulated by sections in Article 37 of the Consumer Protection Law.
The above applies on a cumulative scale. That is, if the debt is 40 dollars, 9% will be applied for the part of up to 10 dollars and 6% for the rest.
If the collection is made through the Courts of Justice, the costs of the process must also be considered.
Financial institutions can deliver the collection of delinquent credit to external companies, but they have the obligation to inform it in advance.
Remember that companies cannot use collection mechanisms that affect the privacy of the home, normal family life or the debtor’s employment status. Nor can you communicate the debt to a third party, send documents that appear to be judicial writings or call at times or days that are not between Monday and Saturday from 8:00 a.m. to 8:00 p.m.
In short, if you have applied for a consumer loan and you are faced with payment problems there are several alternatives to which you can resort before falling into default and collection expenses such as renegotiation and debt consolidation, but in the case of To do so, you should know that the banking entity will not be able to charge you any expenses greater than those established by law.