Paying the loan EMIs on time will help you in more ways than one. It relieves you from late payment charges and keeps you in the good books of both lenders and credit bureaus. You get the luxury of a good credit score that boosts the scope for instant loan approvals in the future. However, many face genuine issues due to which they can’t pay the loan EMIs on time. But we’ve got solutions to the same. Use them and enjoy the benefits mentioned above.
Implement These Solutions to Prevent Non-payment of Loan EMIs
The reasons for being not able to pay the loan EMIs can be different for different people. Some may be facing late salary issues, while others may have got jobless. Depending on the problem one faces, the solution will differ. It’s time for us to read some custom solutions.
How to Ensure Loan EMI Payments When Dealing with Late Salary Issues?
Take help from your friends or relatives to ensure timely payments. Once you get the salary, pay them back. This will help you avoid late payment charges of 2% of the due amount plus applicable taxes. So, if the EMI amount is INR 15,000, late charges will amount to INR 354 inclusive of 18% Goods and Services and Tax (GST). Yearly, it could accumulate to INR 4,248.
What to Do In the Case of Being Jobless?
Think of this situation beforehand by saving more than usual as soon as you start paying the loan EMIs. Save money in a mix of financial instruments – mutual funds, fixed deposits, recurring deposits or life insurance plans with investment benefits. If you need to curtail impulsive purchases to ensure such savings, do the same.
What You May Face in the Absence of Savings?
Late EMI payments by a day or two may not reduce your credit score. But a month’s delay will! Lenders send the repayment report of borrowers to credit bureaus such as CIBIL every month. So, if the payment is due even by that time, the report will show the same and lead to score reductions. If the score reduces to less than 650, banks will disqualify you for personal loans, vehicle loans, etc. You can, however, get secured loans such as home loans, albeit at higher interest rates.
Other Options You Can Try to Clear Loan EMIs
In case you haven’t saved enough and are not earning, you can look to restructure your loan. The restructuring comes either with a deferred payment or increased tenure. You can defer your EMI payments for the period you and your lender agree upon. Whereas the increased tenure will reduce the EMI amount.
Loan Insurance a Viable Option Too
You can insure your loan when taking the same to meet your needs. Banks and non-banking financial companies (NBFCs) offer you loan insurance by which the insurance company pays the due payments in case you lose your income due to an accident or a critical illness. You will need to pay the premium for the same alongside your loan EMIs. In case you go for loan insurance, do compare the lenders and their offers regarding the same.
Debt Settlement Option Relieves You from Paying Loan EMIs – But Is It Useful?
It is useful only in relieving you from debt responsibilities as stated in the heading. A debt settlement is an exercise by which you and your lender will agree to reduce the overall debt amount. The lender might agree to reduce or waive off interest charges. You can avoid being tagged as a defaulter by paying the settled amount. But doing so will disqualify you from at least unsecured loans in the future.