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The offer of today’s loan companies increasingly includes various types of additional options. The task of such options is to adjust the structure of loan products to the needs and preferences of customers. One of such solutions is to extend the loan repayment date. Some companies offer the option of extending the duration of the contract by a specific additional period.
However, it is worth realizing that the option to extend the loan is a solution with its own specificity, which is certainly worth knowing.
As the name implies, extending the loan repayment period simply means extending the duration of the loan agreement . As a general rule, the maximum available contract renewal period will be equivalent to the duration of the basic contract. This means that if the underlying contract specifies a repayment period of 30 days. We will probably be able to extend the loan for a maximum of another 30 days.
Of course, this is not an iron rule, because loan institutions sometimes have a more flexible policy in this regard.
You should also be aware of the fact that the commission for extending a loan is not included in the APRC . This means that we will also have to pay the loan extension option for promotional loans with an APRC of 0%. However, what is also important, using the option to extend the loan does not change the other terms of the commitment. The only additional fee that we will have to pay will be the commission for extending the contract, if of course we repay the loan on time .
In common opinion, extending the loan repayment period is very often associated with refinancing. However, the reality is different. If the loan agreement is extended, we simply receive additional time from the lender to repay the commitment. However, refinancing involves a new loan, i.e. a so-called refinancing loan.
The refinancing loan is usually not granted by the lender itself, but by the entity cooperating with it. For the borrower, this means that the terms of the refinancing loan may differ significantly from the terms of the existing commitment.