The franc decline observed at the beginning of July was unfortunately only temporary. After negative news appeared about the situation of Italy and the downgrade of Ireland, the rate reached a record high – PLN 3.51. So what can people who have to pay back high installments in this currency do?
The expert advises, first of all, not to panic and make hasty decisions, e.g. about currency conversion of a loan. With such an unfavorable exchange rate, converting the loan into PLN will cause that despite several years of repayment, the debt will be much higher than the amount of the loan paid out. In addition, the installment after conversion will increase even more, as the interest rate on loans in PLN is much higher than in francs.
The franc exchange rate has increased from 3.05 zlotys to 3.5 zlotys since the beginning of April, and the installment went up from 1000 zlotys to 1 150 zlotys. After conversion into a PLN loan, the installment may, however, amount to even PLN 1,700.
In which banks can you get a loan?
If we stay with the loan in francs, we will pay high installments for some time. However, in a few or several months, the problems of these countries will probably, at least partly, be solved. Then the safe haven the frank is considered will lose its importance and the course will return to much lower levels.
Of course, not everyone can afford to wait so long for a fall in exchange rate. If someone does not cope with the amount of the loan installment, they can apply for extending the loan period. For example, if 20 years remain until the end of repayment, we have the option of changing the repayment period, e.g. to 30 years. This will result in a loan installment of 300,000. PLN will drop by approx. PLN 400. However, this solution should be used only in a crisis situation, i.e. when we are unable to pay off high installments. A longer repayment period means that interest will be charged longer. As a result, their total amount may increase in the case described above by about 27 thousand.
Another way to reduce the installment amount is to buy francs in an exchange office or in those banks where the rates are favorable. In the case of an installment of 400 francs, buying them in an exchange office can cause that the monthly installment will drop by as much as approx. PLN 100. Such a large installment reduction applies only to the clients of those institutions that use the least favorable rates. In order for the bank to accept francs to pay the installment, you must first sign an annex to the loan agreement and pay about PLN 200 commission. Unfortunately, in some banks the fee is calculated as a percentage of the amount of debt. Then it can amount to over 2,000 zł. Fortunately, new regulations should be adopted soon, which will prohibit banks from charging such fees. Therefore, if we want to use the described option, it is worth waiting a little.
The high rate of the franc can also be “bypassed” by deciding on credit holidays, that is, temporarily withholding repayment of the loan. Such holidays sometimes last even three years, but most often they can be used only for a few months of the year. Suspension of repayment, however, has a disadvantage – as in the case of extending the loan period, we will pay higher interest. In addition, some banks charge a commission for reaching for this solution.