Prolongation – what is it?
The word comes from Latin and means exactly “extension” – in financial terminology, extension usually means postponing the due date of a debt, loan installment or invoice payment.
In the case of loans or credits, extensions are sometimes paid additionally – information about the amounts to be paid for an extension can certainly be found by the borrower in the contract concluded with the bank.
Rollover vs. credit history
Before deciding to write a request for an extension of a loan installment, it is worth checking your own credit history – this is especially important when there are still many installments left to pay. Banks, of course, realize that multi-year commitments (such as mortgages with terms as long as 30 years) carry certain risks, but they cannot disregard negative entries in the BIK Entrepreneurs – So let’s first make sure that we have not allowed ourselves to neglect other obligations while paying off the real estate loan.
Extension of the service deadline
The extension can apply not only to the due date. There are situations in which a person or company that is supposed to perform a service asks for an extension of the deadline – for example, due to external circumstances that make it impossible to perform the service.
EXAMPLE
During the construction of a house for a client, Mr. Mariusz’s construction company is having problems supplying windows and doors for the building – the problem lies with the factory, which had to halt production for a while due to an epidemic threat. Since the facade of the building is to be done by another company, which is also bound by the deadlines agreed with the other clients, Mr. Mariusz may decide to issue a request to the client to extend the deadline for the services.
Situations like the one described above are usually resolved amicably – the parties can look for another window and door supplier or reschedule some of the work without official letters. However, it may be that due to the arrangements made and dependencies in place, it will be necessary to record any change in the date or scope of services.
How to request a deferred payment?
First of all, we should contact the creditor. Not all banks or loan companies offer rollovers, so let’s save ourselves the disappointment and make sure first that the lender allows such an eventuality at all.
If we already know that the institution to which we have a financial obligation grants extensions to its customers, we can expect the lender to want to evaluate our financial situation after we have been contacted.
Important!
Even one unpaid installment on time severely reduces the chances of a successful extension application, as well as having a very negative impact on the company’s financial health rating. Always make sure to pay your dues on time.
If the conclusions of the evaluation are positive, we will be able to draw up an application for an extension. The lender will then make contact and offer to update the terms of the loan agreement. A rollover will affect the duration of the loan, may also lead to a change in the overall amount of the loan, or even – if it assumes the creation of a long break in the loan obligation – will change the amount of subsequent installments.
Extension of the due date – we write the application
If you want to obtain a postponement of payment, it will be necessary to write down a request and send it to the representative or to the creditor’s registered address. A properly drafted application should contain a range of relevant information:
- Creditor data (registered address, tax ID, name of representative or company name);
- Data of the debtor (name or company name, TIN (if applicable), address of residence or registered office);
- Credit/loan agreement number;
- Anticipated debt repayment date;
- Proposed or agreed with the debtor a new debt repayment date.
The document should, of course, be titled in an unambiguous manner (for example, “Application for extension of the payment deadline”) and signed or stamped by the company.
To increase your chances of getting an extension, your application should also include the reasons for your request and, if any, attachments in the form of documents proving the existence of circumstances preventing you from paying the installment or performing the service. In the example mentioned earlier by Mr. Marius, the contractor could attach to the request for an extension a statement from the window manufacturer about the need to stop production.
