Great occasions often require great deal of money and when great deal of money is not available loans are the easiest access to liquid cash. Expediencies such as your wedding, medical emergencies, buying a home, purchasing a car, paying your medical bills, education of your children everything calls for a “Loan”. With the easy access to a number of loans available in the market there are a lot of reasons as to why you would avail a loan – but can you really afford to take a loan without a failure to repay? What will happen if you fail to pay your credits in time? Get an answer to all your queries.
Availing loans we all know has become as quick and easy as clicking the mouse on your system- however not paying back your credit in time may put you in a bad light which would reflect in your financial score, also known as “Credit Score”
What is a “Credit Score”?
Credit Score is basically a number derived from your credit history – the credit history is records of your financial transactions made, the outstanding loan on you, and your credit card history. This is basically a trend of all your financial transactions based on which your reliability to repay is determined. Based on your credit score your banker does the risk involved in granting you the required loan amount, however, it remains upto the discretion of the bank to determine the loan amount that can be given to you.
So two things here remain Certain:
- Not paying your credits in time definitely would lay a bad impact on your Credit Score”.
- Further, your bank can reject your loan application based on your poor credit history.
What to do to have a good Credit Score?
- Pay your monthly installments well in time
- Keep your account funded enough especially one day before the date of EMI.
- Do not withdraw the amount when your EMI has not been deducted on the said date, as the same can be deducted anytime later.
- If you fail to pay an installment due to any reason, approach the bank before the bank approaches you, the bank will start sending reminders immediately after you have missed to pay your installments. Repay immediately to avoid unnecessary interest levied.
- In case of failure to pay you may be issued notices to pay the outstanding along with the interest levied on it.
- If you fail to pay the requisite amount inspite of serving you the notices, the bank will contact your guarantor who will have to repay your outstanding loan along with the interest. In cases where you have given a security deposit the bank may cease that to recover the outstanding amount.
- There are exemptions that the bank may consider such as medical emergencies, loss of job, etc. in such cases the bank may give you a Moratorium Period which is also known as holiday period that may be granted at the discretion of the bank.
What to do if you have paid an Emi and you feel it is getting a bit too much on your Pocket?
- You can consider paying your loan amount in smaller EMIs which can be set by your bank on a request, however the other parameters like rate of interest will increase in such cases.
- Another thing you can consider is availing loan for longer loan tenures through which you will be able to pay your loan amount in smaller and affordable EMIs which will ensure you will have enough money to re-pay your loan amount.
- If your loan provider cannot revisit your loan charges, you can compare other loan offers already available in the market offering you considerably lower rate of interest, longer tenures and affordable EMIs and consider a “Balance Transfer”. Balance transfer will allow you to change your loan provider in cases where you are not satisfied with the loan scheme you have been offered. This will help you pay your loan strategically and well in time.
- If you are in a situation where you cannot pay your loan at all, in such cases the bank may also offer you “One time settlement” which basically means a waiver on both principle as well as the interest amount in certain percentage decided by your lender. You can consider one time settlements keeping in mind that it will reflect in your credit history and it will become hard for you to obtain loans till you re-gain your financial health.
When you take a loan prioritize your commitments, compare and apply for loan only when you can pay back – you never know when a necessity arises again