It is difficult to get a loan with open delays even in a microfinance organization that is more loyal to borrowers than banks. Overdue debt shows the client’s low payment discipline and increases the risks of the microfinance organization.
Payday lenders can approve an urgent loan for a card with delinquency and a bad credit history, but at the same time worsen the terms of credit – reduce the amount, term and increase the interest rate. To get a loan with delays on the card, the client must prove his solvency – it is desirable to have an official place of work, officially confirmed income, which is enough to pay off debts.
What is overdue debt?
Overdue debt is a debt to a credit institution that the borrower (individual or organization) is not able to pay to repay the principal and interest on the maturity date under the agreement.
Typically, credit institutions are flexible in terms of late payment time from 1 to 3 days, but if the client does not pay after this period of time, there is an overdue debt.
Depending on the late closing, arrears will be updated on CIC and divided into groups of bad debts (credit history), which causes difficulties when clients want to take a loan elsewhere.
Interest rates on overdue debts, sanctions for violation of the obligation to pay the principal debt
Essentially, interest on an overdue principal balance (also known as an “overdue interest rate”) is a form of sanction for late payment of a debt (debt arising from an obligation to pay for important goods. Commercial system, repayment of a loan in a banking relationship) . The defaulting party must pay interest accrued on the principal amount of the default, corresponding to the period of delay in payment, at a certain interest rate exceeding the interest rate for lending.
The arrears transfer provision only applies to the principal balance, together with the provisions for penalties for late payment of interest under current law, overcoming the lack of consensus on the application of the law as to whether the arrears are principal or not. including interest; the same debt was transferred to arrears, and the sanctioning of penalties for violations, damages, etc., is quite common.
In the banking sector, the penalty for breach of contract in the form of an interest rate on arrears is set in accordance with generally accepted practice, which improves the borrower’s sense of compliance with the terms of the contract. This measure is applied only if there is a fault of the borrower (intentionally or unintentionally) to violate the obligation to pay the principal debt when it is time to repay the obligation.
When a credit institution uses the overdue debt transfer service, the borrower must pay an interest rate higher than the normal loan interest rate agreed in the agreement. The current law limits this penalty interest rate to 150% of the loan interest rate as a mandatory limit to prevent abuse and protect the interests of the borrower. The parties may agree on a penalty interest rate below the established rate (from more than 100% to less than 150% of the interest rate on the loan on time) depending on financial capabilities, conditions, influencing factors affecting this obligation.
How to get a loan with current delinquency and bad credit history
A loan with delinquency and poor CI is one of the few options for obtaining credit funds. Such clients are usually denied by the bank, but they can take money from the MFO. For this you need:
- Choose a MFO. Choose such microloan programs for which the approval rate is higher – so there are more chances of receiving funds with a damaged credit history.
- Compare conditions. To reduce the overpayment, you can use the first interest-free loan – it does not accrue interest for the entire period of using the funds. In other cases, rates can reach 1% per day. The amount in the presence of delays is usually no more than 10,000,000 dong, and the loan term is up to 1 month.
- Submit an application. To fill out the form, go to the website of the selected company. Indicate your name, address (actual and at the place of registration), ID data, income, place of work, etc. Also enter your phone number and email. Together with the application, you need to indicate the amount, term of the loan, select the transfer method – a bank card or an electronic wallet.
- Wait for SMS with MFO response.
- Get money. If the application is approved, the transfer time is usually no more than 10 minutes. Sometimes the transfer takes up to 3 days, for example, if a bank account is selected as the method.
MFOs may put forward additional requirements – the provision of collateral, the involvement of guarantors, confirmation of solvency with income certificates.
Where will the loan be approved if there were overdue payments on the loan?
A loan with current debt or bad credit can be approved by any MFO if the borrower:
- Will be able to prove its solvency. Even if the terms of the loan program do not require proof of income, you can offer the company a salary certificate and a copy of the employment record. MFOs, unlike banks, also take into account informal income, for example, from part-time work, receiving social benefits, scholarships, pensions, property rental fees.
- Will observe payment discipline. The company must have guarantees that the client will repay the debt on time. If the current delay occurred in the same MFO, the application will not be approved – a new loan is not available in most companies if the previous one is not repaid.
- Will not have long uncollectible delays and large debts to creditors. Borrowers with a high debt burden (above 40-50%) MFOs are almost always denied the issuance of funds.
Many MFOs offer a credit repair service. It assumes that the client will receive several small loans in a row, and if all of them are closed on time, the information in the credit history will be updated, demonstrating the reliability of the borrower.
Author: Chử Trúc Lâm from https://vaytienmat24.com/