Loan repayment – what support can you count on?

How has the situation on the financial market changed through a coronavirus? Business collapse or job loss and financial liabilities Loans and coronavirus or how to pay back the debt without income.

The statement issued by the Good Finance of Loan Institutions Postponement of loan repayment for the coronavirus Changing the debt collection and writ procedure during the epidemic Suspension of loan repayment in connection with a coronavirus

How has the situation on the financial market changed through a coronavirus?


The coronavirus pandemic began in Poland in March 2020. It was this month that the number of infected exceeded 1,000, which forced the government to introduce an epidemic that has specific consequences for citizens and the economy. The most important of them include:

  • closing borders and schools,
  • restrictions on movement,
  • assembly ban
  • compulsory quarantine of thousands of people.

The effects of such actions were quickly felt by the economy – many companies had to suspend their operations or significantly reduce it.

The financial market also quickly reacted to the pandemic and related economic consequences – on the global stock exchanges one could observe strong declines in the most important indices and prices of many commodities.

Before the pandemic, online loans were a convenient way for many people to make up for shortcomings in their wallets.

Today, some of them are facing a serious problem of repayment of liabilities incurred in the face of the collapse of the economy, the labor market and related financial problems.

The collapse of companies or job loss and financial liabilities


The problem with repayment of the loan concerns mainly the sick, those in quarantine and employees of companies that suspended their activities. Already at the beginning of the coronavirus pandemic, the news was given on the market situation clearly indicated which industries would have the biggest problems.

Here you can mention primarily:

  • transport and logistics companies,
  • companies providing hairdressing, cosmetics, etc. services,
  • commercial outlets – especially those offering non-food products,
  • production plants dependent on the supply of components from abroad,
  • gastronomy and entertainment industry (restaurants, cinemas, theaters, etc. closed).

Most companies plan to reduce employment by:

  • reduction of working time and reduction of remuneration,
  • individual dismissals resulting from the liquidation of some jobs,
  • group redundancies due to the impact of the epidemic on company income.

In connection with the above effects of the epidemic, experts agree that coronavirus in Poland in 2020 will contribute to the economic slowdown and the collapse of many enterprises, as well as an increase in unemployment.

Loans and coronavirus, or how to pay back the debt without income


Borrowers who have been directly affected by the coronavirus pandemic described above are facing a serious problem today. A sudden loss of all or part of their income prevents them from paying their debts on time. Unfortunately, the lack or delayed payment of installments has a number of consequences :

Many people who do not have funds to pay their liabilities ask for financial help from relatives or take further loans to pay payday loans. Unfortunately, a loan for paying off the debt is not a good solution for people with no stable income. In fact, this solution only postpones the problem and increases the total debt by further interest.

So how do you pay back payday loans without an income? You can try the following solutions:

  • deferment of installment repayment or payday refund,
  • changing the loan repayment schedule, e.g. by reducing the number of installments and moving their due dates,
  • suspension of loan repayment for a specified period or grace period for capital repayment.

All of the above options require contact with the loan company and direct negotiations.

The statement issued by the Good Finance of Loan Institutions


It is worth knowing that the solutions listed in the previous paragraph are recommended by the Good Finance of Loan Institutions. It is an organization of non-bank companies with the best reputation – in practice, it is about 80% of institutions offering quick loans online.

In March 2020, GFIC issued an official recommendation to its members regarding the introduction of assistance measures for borrowers directly affected by the economic or health effects of a pandemic. The most important such activities include:

  • at the borrower’s justified and documented application, deferment of loan repayment date,
  • modification of the admonition and debt recovery procedure, taking into account the individual situation of people affected by the outbreak.

The recommendation also applies to issues related to granting loans – companies should adapt the offer and the method of assessing clients’ creditworthiness to the changing market situation.

Postponement of loan repayment for the coronavirus

A request for postponement of repayment must be justified. The postponement of the repayment deadline can, therefore, be used mainly by sick persons in quarantine and those who, due to a pandemic, fell into financial trouble (e.g. as a result of losing their job).

Online payday loans should be postponed by a period which takes into account the borrower’s situation. Importantly, according to the recommendation, an application for deferment of repayment can be submitted electronically and the loan company should consider it free of charge and immediately.

In most cases, the loan agreement will not have to be annexed, although e.g. repayment in installments of the liability according to the new schedule and deferral of the payday payment should be confirmed in writing.

Changing the debt collection and writ procedure during the epidemic


The recommendation of the Good Finance of Loan Institutions should, first of all, encourage companies to give up the automatic launch of standard debt collection procedures. In a pandemic, the individual circumstances of each borrower should be taken into account, which requires, for example, establishing direct contact with the customer to explain the reasons for the delay in repayment.

In its recommendation, GFIC calls for compliance with ethical principles enshrined in the Code of Responsible Lending of the Good Finance of Loan Institutions. So you can hope that the companies will not use the situation for profit, that is, they will not propose to postpone the repayment date for an additional fee. Rolling over a loan through refinancing is not a beneficial solution for people struggling with a lack or reduction of income.

Suspension of loan repayment in connection with a coronavirus


Not only the customers of loan companies but also people who repay bank loans can count on assistance in paying off their liabilities.

The Good Finance recommended that the banks allow people affected by the pandemic to postpone repayment of subsequent installments. Such a grace period in loan repayment can be granted on the basis of a simplified procedure for a period of up to 3 months.

Many institutions have already adapted to the above recommendations. The option of suspending loan and loan installments has been introduced by, among others.