Cost of loan restructuring

Clients with financial problems can have their loans restructured without incurring high management costs initially, by extending the repayment period or by opting for a grace period of several months.
Most banks charge restructuring commissions amounting to tens of RON, while others do not charge any additional fee if clients prove that their financial situation has worsened, but in the ultimate cost incurred by the client can climb to 15%.
“If they extend their repayment period, clients have to pay a higher interest rate, so the final cost of the loan will also be higher. If they opt for a grace period, clients only pay the interest rate. In this case, the cost difference depends largely on the structure and the type of loan,” says Anca Bidian, general manager of credit brokerage Kiwi Finance.
For instance, in the case of a 20,000-RON loan contracted over five years at the average market interest rate, a client pays around 28,000 RON at the end of the lending period. If, three years into the contract, they decide to extend the repayment period from five to seven years, the overall cost of the loan climbs to 32,000 RON, according to Kiwi Finance calculations.