Assume you have already taken out a personal loan for a term of about 5 years to pay for unexpected expenses or some other reason. Due to the current state of covid, it is possible that you will be unable to make a single EMI payment for reasons beyond your control. Paying back your debts on time is crucial if you don’t want the bank to view you as a high-risk customer.
You will be considered a defaulter if you fail to make a 1 lakh personal loan EMI payment when it is due and at the appropriate interest rate. You should be prepared for the worst case scenario, even as you hold out hope for the best. What happens if you miss an EMI payment on a personal loan or loan from another financial institution, and what you can do to avoid this, is crucial information to have.
The value of your credit score decreases
You may not have known this, but missing even one instalment payment on a personal loan for low salary can have a negative impact on your credit score. Furthermore, most lenders check a borrower’s credit record to learn more about the individual’s repayment history with previous loans. In the event that you decide to apply for a personal loan or another type of loan in the future and your prior bank has flagged you as a high-risk borrower, your application may be denied. You can call the personal loan customer service number whenever you need help.
Fees and charges
Personal loan companies and other lenders may assess late penalties for borrowers who are late with their EMI payments. Other costs also contribute to the loan total, which is typically between 1% and 2% of the EMI amount due. Get in touch with the personal loan customer service number to verify if the sum you have to pay back is significantly higher than the original debt.
You will end up owing more money for your 1 lakh personal loan and any other personal loans you may have taken out if you don’t pay them back on time.
Lowers your co- signer’s rating too
The bank may require a co-signer or guarantor if your credit score was poor when you applied for the loan. Don’t forget that damaging their credit rating is a direct result of missing monthly payments on a personal loan.
As we’ve seen, missing payments on a personal loan for low salary can have a negative impact on your credit score and your ability to borrow money in the future.
Here are some suggestions for how you might be able to prevent such problems.
Organize your finances more effectively
Borrowers typically fall behind on EMIs due to poor money management and a reluctance to call the personal loan company’s customer service line for assistance. You need to better arrange your finances and make sacrifices if you want to avoid falling behind on your EMIs for personal loan for low salary.
It is also possible to negotiate a reduced EMI if you need to
If the borrower experiences financial hardship, such as the need to pay for medical expenses or the loss of employment, they may have difficulty maintaining their EMI payments. If this is the case, the borrower needs to visit the bank and explain the circumstance. The two most common ways banks reduce EMIs are by increasing the term of an existing loan and converting an unsecured loan into a secured credit.
Get in the habit of saving immediately.
Personal loan instalments being missed are often the result of unforeseen circumstances. While you’re paying off a personal loan, it’s a good idea to keep some cash on hand in case of an unexpected expense. The emergency fund should contain enough money to cover around six months of your salary. In this way, you can keep up with your Personal loan EMI payments and any other personal loan payments you may have even if something unforeseen comes up.
If you need financial assistance, you should ask your loved ones for a loan.
If you find yourself unable to make the minimum payment on your EMIs each month, consider borrowing money from loved ones at no interest. In this approach, there will be no drop in your credit score and the bank will continue to view you as a low-risk borrower.
Ask for grace period for EMI payments
If you haven’t paid your EMI for a while at the 1 lakh personal loan interest rate that is currently in effect, but you expect to be able to pay it off in one lump sum in the coming months, you should talk to your bank about this. The majority of lenders for unsecured loans may probably extend your EMI payment schedule by a few months, but this will come with a late payment cost. They could also allow you to make interest-only payments for a short period of time.
The effects could be both costly and terrible for your reputation. Fees, penalties, and interest accrued due to your late payment total a significant sum. The harm to their reputation is even worse. One missed payment can have a significant impact on your credit score. And it can prevent you from getting any further credit, too. Nonetheless, you should at least talk to your lender about a possible solution; they may be willing to cut the interest rate on your personal loan for low salary.
Last but not the least, while these tips will help you manage EMIs, one step that can help possibility avoid such scenarios is to focus on your choice of tenure when applying for the loan. Besides the rate, amount, fees etc, the tenure is equally important as a decision.
Only only for that tenure whose corresponding EMI you will able to repay without putting lot of pressure on your monthly finances. Failing to do that will increase the chances of missing the EMI or having difficulty in paying it someday or the other!