Keeping finances under control and keeping track of costs is not easy at all. Credit card debt, current account minuses, and monthly home loan annuity payments are the most common problems most Croats face. See for further editorial

In Croatia, total household loans amount to HRK 117 billion. Banks charge special fees and interest for each of these loans, and costs can rise to several thousand kuna depending on the number of loans. In order to simplify the monitoring of all financial liabilities, financial services have been created that allow for the repayment of loans and other debts .

The goal is more of a different commitment that a customer has to replace with a single loan

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Pushing multiple different loans under one liability reduces the cost of fees and interest that a customer would otherwise pay for multiple different credit obligations.

For such cases, banks have specially designed services. Before you decide to repay loans and other debts, it should be borne in mind that some banks charge higher interest rates for early termination of loans.

They usually offer their clients two options for offsetting loans and other debts, namely rescheduling and refinancing loans. When it comes to rescheduling loans, one should distinguish between those intended for rescheduling due to unforeseen circumstances such as loss of business and those for closing multiple different bank loans, such as more cash loans, or overdrafts.

Reprogramming changes the repayment schedule of the existing loan that the client has, while refinancing closes the existing loans and opens a new one that consolidates all the obligations that have been hitherto.

Offsetting loans and other debts by reprogramming loans

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The program changes the terms of the existing loan and usually extends the loan repayment period by several years, thus reducing the monthly installment. At the same time as the rate is reduced, the total debt increases as more repayments and interest are paid with longer repayment periods.

Most often, the repayment period changes, a moratorium on repayment is granted, which in principle means that the principal is temporarily frozen and only interest is paid and security instruments are changed. The loan beneficiary usually has the option of choosing when the monthly installment will arrive for payment and may change it when reprogramming the loan. The fee ranges from 0.5 to one percent of the outstanding loan principal.

Offsetting loans and other debts by refinancing loans

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Refinancing is the closing of existing debts and loans with one new one. In this way, non-purpose liabilities such as current account deficits, cash loan, credit card debt can be consolidated and closed. What cannot be refinanced is the housing loan that Croats most often have.

This also means that liabilities that are not repaid by debtors are duly rescheduled, while liabilities that are repaid are duly refinanced.

When borrowing a new loan, all the usual costs, such as the fee for granting the loan, the notary’s fees, most often occur… The peculiarity of this type of loan is that it is exclusively earmarked. The money from the loan is paid directly into the account of the loan beneficiary with the obligatory proof of closing the liabilities, and up to 30 percent of the amount can be realized in cash. This means that it is paid out by a bank or other financial institution for a specific purpose and should be used solely for that purpose. The interest rate on this type of loan ranges from five to 10 percent.

Defeating Loans and Other Debts – What Should You Know?

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If you plan to offset credit and other debts, it should be borne in mind that banks are not allowed to charge early repayment fees or partial home loan repayments. It was abolished, with the aim of eliminating this fee for all loans. In certain situations, no fees are charged for offsetting loans and other debts, which is when less than 12 months remain until the loan is disbursed or less than the bank has prescribed. It all depends on the conditions set by the bank itself.

It is therefore advisable to inquire about all possible fees, interest and interest rates that banks may charge you before settling loans and other debts. Debts can also be repaid by taking on some of the products in the loan portfolio, especially when it comes to smaller amounts.

Most often, these are quick non-purpose loans intended to close exactly liabilities. Such loans have a short-term repayment schedule and are repayable on average up to one year. Most often, these are smaller amounts of up to HRK 6,000 thousand that sit on the account within 24 hours of submitting the complete documentation. Considering that they are smaller sums of money, only an ID card, current account card and payroll or pension list are sufficient. The complete application for a loan is done online, thereby reducing the approval process itself. This is especially important in emergency and unpredictable situations, when it is necessary to fix the financial situation and minimize unnecessary costs.