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capitalising arrears

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  • 01-02-2011 6:27am
    #1
    ronald reagan
    Registered Users Posts: 74 ✭✭


    I recently got a letter from my bank(kbc) advising me of the option to capitalise some arrears we have built up. 10k arrears on 240 outstanding.
    Can anyone outline the key question I need to be asking if I contact my bank.
    What are the pros and cons etc?

    Cheers
    Tagged:


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    #2
    Jim2007
    Moderators, Business & Finance Moderators Posts: 10,280 Mod ✭✭✭✭Jim2007


    ronald reagan wrote: »
    I recently got a letter from my bank(kbc) advising me of the option to capitalise some arrears we have built up. 10k arrears on 240 outstanding.
    Can anyone outline the key question I need to be asking if I contact my bank.
    What are the pros and cons etc?

    Cheers

    Ask them to explain what it means and how much more you'll end up paying...

    I can see one major advantage for KBC, the more arrears they can capitalise the fewer non performing loans they will have to report to the market. If this is really their objective, then perhaps they might be open to an alternative deal - write off the 10K, give you a break on the capital payments and you might be willing to start making interest payments.... this would have the same impact in that they would not have to add you to the non performing loans list :D Who knows, they just might bite and if not all they can do is say no...

    Good luck with that,

    Jim.


  • Options
    #3
    homer911
    Registered Users Posts: 5,119 ✭✭✭homer911


    They are simply offering to collect the arrears at the end of the scheduled maturtiy date, through further instalments - this means you will be paying a lot more interest than if you were to clear the arrears now.

    They are NOT offering to write-off your arrears

    Its just putting off the evil day for you....


  • Options
    #4
    ball ox
    Registered Users Posts: 699 ✭✭✭ball ox


    Ask them what the cost of capitalizing your arrears would be. This will give you an idea of how much extra you will end up paying over all.
    Take into account your credit rating too. Capitalizing your arrears will effectively put your loan back in line which means your credit rating would no longer be under threat (from that particular loan). You will pay more in the end though.


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