Banks and Non-Banking Financial Companies(NBFCs) provide numerous kinds of commercial services, one being lending loans. A loan is classified typically as secured and unsecured. An unsecured loan doesn’t demand an asset for collateral whereas a secured loan does. Therefore, the features of the loan vary because of that asset. In a secured loan, the collateral(asset-gold, property, car, house, etc..,) acts as a surety. So, even if the borrower doesn’t repay the loan amount with interest, they have the right to auction the asset to compensate for the owed money. But, as an unsecured loan needs no collateral, there aren’t many ways to compensate for the loan amount and interest rate financially, so banks and NBFCs take action legally. Therefore know your repayment capability and interest rate affordability before taking out a loan. A personal loan EMI calculator helps you do that conveniently.
What to do when you as a borrower can’t pay off your personal loan?
When you realize that making any more Equated Monthly Installments(EMIs) and repaying the loan amount acquired is difficult, contact your lender immediately. Have a face-to-face discussion with them, on what are your options. No lender likes or wishes to receive a call from a borrower saying they can’t repay the loan, but most banks and NBFCs are willing to help out their debtors. Maybe they can reschedule your loan, maybe they can lower your interest rate and increase the tenure. But there are options present to help you. A loan moratorium is also another choice if your loan default is for the first time. By opting for this scheme, a borrower needn’t pay the interest rate for a maximum of 3 months if they have a consistent repayment record previously. The 3-month interest can be paid with the principal amount or be divided equally to the rest of the monthly installment payments. But, the main factor is banks and financial institutes give you enough time and space to recover and repay.
It is definitely better than not repaying altogether. If you’re defaulting on the personal loan for the first time, then try consolidating it. By consolidating a personal loan, you avail another loan or debt from a bank or NBFC to pay off this original loan. This way you have time to think and arrange for your funds. Debt consolidation personal loans often have low-interest rates and flexible tenure. Therefore, they have good chances of helping you. Another method to pay off your loan is by auctioning or selling your asset. Or you can even avail a secured loan like a gold loan or property loan to pay off your personal loan debt. Gold loans do not require CIBIL score or income proof, they only need a valid gold article(s) as asset and ID proof to sanction loans. This is another option for repaying.
What happens if you don’t repay your personal loan?
The missing payments and the defaulting of the loan affects your credit report immensely. Thereby affecting your CIBIL score eventually and hindering your chances of availing a loan in the future. A CIBIL score or credit score is extremely necessary to avail loans and especially one like a personal loan(unsecured). Your credit utilization ratio also increases and having a high credit utilization ratio is also an obstacle in availing a loan or debt from a bank or NBFC. There are more chances of suing you for the non-repayment of a personal loan as banks and financial institutes tend to take things to the court and seek legal remedy if and when the borrower defaults incredibly. Therefore, there are repercussions for not repaying the loan and so it is a necessity to pay off the loan on time. ICICI is a well-known bank with multiple branches worldwide. The features of a personal loan in ICICI are extremely affordable and beneficial. ICICI personal loan EMI calculator can be used to calculate the interest rate and know all about the personal loan details.
Read More:- Alternatives for non-payment of personal loan