If the borrower insures the loan, this gives the bank many advantages, because it is protected from non-payment of the debt:
If the borrower is unable to make payments, the bank will not have to look for the debtor and pay for the services of organizations that deal with collection.
If the loan is insured, the case will not go to court. This means that the bank will not have legal costs associated with the return of the debt.
All this significantly reduces banking risks and entails obvious advantages for the borrower:
higher probability of approval;
reduced interest rate;
increased credit limit;
the opportunity to take out a loan hungary mobile database for a longer period.
Taking out a policy may not affect the terms of the loan. Then the main advantage for the borrower is that in critical circumstances he will have one less problem.
If an insured event occurs, the borrower receives more benefits:
the debt does not increase, fines and penalties are not charged;
no negative entries appear in your credit history and your reputation is not damaged;
there are no legal proceedings regarding overdue debts, there is no risk of losing savings and property.
The main disadvantage of insurance is the increase in expenses at the initial stage (with a one-time payment) or during the entire loan term (with regular payments). When the cost of the policy is included in the loan amount, interest is also charged on it. If the insured event never occurs, these overpayments may seem unnecessary.
Is it possible to connect insurance and then cancel it?
If the insurance policy is a mandatory condition of the loan (for example, for car loans and mortgages), it is impossible to refuse it. The only thing you can do is change the insurance company.
For voluntary insurance programs, there is a so-called "cooling-off period", which usually lasts 14 days. During this period, you can contact the insurance company with an application to terminate the contract.
Sometimes insurance affects the terms of lending, and this is specified in the loan agreement. In this case, refusing the policy leads to an increase in the interest rate. The monthly payment amount in this case may also increase.