Why is your credit knowledge so important? Making a reasonable decision about entering into a similar commitment is not possible if you do not have adequate information facilities, so try to expand your message resource as much as possible. Wanting to carry a torch of financial education, today we will discuss the subject of limitation on credit. What is this? When does the loan agreement expire in practice? Let’s answer this question!
How many years does the loan expire?
What is the limitation period for a bank loan? When does the loan repayment expire? What rules are worth remembering in this case. The basic issue is: after how many years the loan is time-barred? It depends on who the lender is. How many years does the loan expire?
• Bank loans and non-bank loans expire after 3 years. Why? In this case, the money was borrowed by an institution that deals with it as part of its business activity.
• In the case of loans that are granted by parties not carrying out similar activities, the limitation period is 6 years (eg when a family member borrows money)
However, it should be remembered that this limitation period only applies if the limitation period is not interrupted! This is very important!
When does the loan installments expire?
We already know from when the bank limitation period counts etc. In practice, however, it is not so simple. Why? After what time can we talk about the loan being time-barred? Here, unfortunately, the matter gets complicated, because the limitation period should be calculated for each installment separately. What does it mean? When does the bank loan expire? We count the limitation period from the date on which the installment should be paid. But this is not the end! You must remember that the installment expires only at the end of the relevant calendar year.
Complicated? Let’s try to explain it on a specific example. When does the bank loan expire? Let’s assume that you should pay the bank loan installment on March 10, 2019. Theoretically, you might think that in 3 years from that moment the installment will expire. Nothing could be more wrong! This particular installment will expire only after December 31, 2022, in accordance with the principle that the installment will expire only at the end of the relevant calendar year.
TO CONCLUDE: we answered the question when the limitation period for outstanding bank loans, non-bank loans etc. is due. However, please note that the information presented in the article does not apply to mortgage loans! When is the limitation period for the outstanding bank loan? A loan, a loan granted by institutions conducting business activity connected with the provision of such services, expires after 3 years. The loan granted by persons not conducting this type of business activity expires after 6 years. What is the limitation period for a loan? The limitation period is calculated for each installment separately.