Basic practices for loan repayment

25.06.2021    Share +

Basic practices for loan repayment

Withdrawing bank loans can be done relatively easy so you can finance your projects or timely fill in holes in your budget. In this article we will focus on the ways to repay the loan, as well as some features that may be useful to you.

Repaying the loan depends mostly on your regular income. You must first calculate your current expenses and income well in order to allocate sufficient funds to repay the loan. For some consumers, the income is high enough to pay even more than the bank requires, which reduces the total amount to be paid. In this case, debtors face the dilemma of early repayment or investing in various profitable projects. Investing in deposits as of the date of writing this article is not promising, given the low interest rates.

How to repay the loan regularly?

Once you have signed a contract with the bank and accepted the funds under the loan, you enter the period of its repayment. Many banks offer their customers promotional interest-free periods. With them you may not pay any monthly installments or pay only amounts on the principal, loan servicing fees and commissions. After the expiration of the grace period, which varies depending on the bank from 3 to 6 months, the regular payment of the monthly installments begins, which should be specified in advance in the contract.

In addition to the payment of the monthly installments on the principal and interest, you will have also the fees for servicing the loan, commissions and insurance, if you so wish. All these costs are calculated in advance with the APR (annual percentage rate of charge) so that you can assess your repayment options before entering into a contractual agreement. The monthly installments are determined on the basis of the APR, the interest, the repayment period and the principal you have received.

TBI Bank accepts the loan repayment amounts in the currency in which the loan is granted. The installments should be paid on the due date, which is mentioned in the repayment plan or the contract, and the amounts are transferred to a previously issued current account with the creditor bank. Upon payment of the installments in a currency other than the one under the contract, the difference in the currency conversion shall be borne by the borrower. All these features become known to borrowers even before signing the contract. Credit counselors will give a comprehensive answer to the questions and uncertainties that arise then, so do not rush to sign before you are aware of the repayment installments, the repayment plan and the terms.

Methods for payment of installments to the creditor

How can you pay your monthly installment? Today, there are modern communication capabilities that facilitate the process, but require additional knowledge in the Internet environment. If you prefer the old "conventional" methods that were used before the advent of technology, you could do the following:

  • Your salary is automatically reduced after part of it is transferred to your creditor's account. Banks are favorable to clients who, upon application, provide a one-year employment contract. This is kind of a guarantee for regular repayment of the debt and a means of reducing credit risk. The user can receive some discounts and bonuses, while at the same time not having to fill in payment orders and wait in queues at bank offices or ATMs.
  • The most popular method is a simple visit to a bank office, where you can deposit your money at the cash register. If you are unable to visit a bank branch due to a conflict with your working hours, you can look for another bank which offices have extended business hours. There you can also transfer the amount to your bank, but you will pay a slightly higher fee.

Electronic methods for making repayments

  • If your schedule differs from the bank's working hours, you can also use the B-Pay service at an ATM. In Bulgaria, you have the option to make this payment from almost any device by transferring the amount electronically from your debit or credit card. You need to get information from your bank about the merchant code you need to enter after logging in to "Other Services" and then to "B-Pay".
  • The modern ways to repay a loan are the electronic methods of online banking to the lending bank or electronic transactions through a digital internet payment system such as ePay.bg. In this system you can always get information about the amount you owe to the lender.
  • The "Quick repayment" service of TBI bank prevents forgetting and delaying the payment of the installment. The bank does not oblige you to open an account with them, from which you can automatically transfer the available assets. This can be done from any other bank. The service automatically transfers the installment money 15 days prior the due date, so you won't have to worry about penalty interest, queues or the possibility of forgetting.

What is early loan repayment?

The Consumer Credit Law provides the right of the borrower to apply for early repayment of his debt to the creditor. This gives consumers some freedom in financing. The loan you have withdrawn is for a longer period in order for you to be relieved in the installments, but in case of partial early repayment you can reduce the total amount of the principal and the interest until the end of the due date.

In case of early repayment of a loan, the debtor pays at once a larger part of the previously agreed installments, which reduces the amount of the principal and respectively the interest on it. Debtors can choose one of the following two options for preparing a new repayment plan:

  • To reduce the monthly installment on the already reduced loan amount, but to keep the repayment period.
  • To shorten the period for the full repayment of the loan without changing the amount of the installments.

Usually, in the case of early repayment, the debtor saves a significant part of the interest costs and the banks have the right to charge a fee for the service if the loan is a mortgage or a company loan. You can get additional information about these fees from credit counselors prior receiving the funds or when repaying the loan.

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