Life is long journey and there can be a need of funds at any point of time. Funds can be generated through various ways. Borrowing a loan from a Bank/ NBFC is safest among all. Buying a house or mortgaging an asset for the arrangement of funds for any reason. To spend for the fulfilment of the desires need help in the form of funds. This funding can be arranged in the form of loan. Thought of loan comes with the next thought of EMI’s. It can be any type of loan whether secured or unsecured, loan comes with a responsibility of paying monthly instalments. But what if one is unable to pay the EMI’s on time?
It is not only important to pay the EMI but also to pay on time is very important. Following are the consequences the borrower has to face before he misses his EMI.
Banks/ NBFC will continuously follow up on EMI delays. At times, external means such as recovery agents are hired to recover the payments. Such situations can be embarrassing and should be avoided.
Lenders have the facility to get the payments on time through ECS or National Automated Clearing House (NACH). Due to insufficient funds ECS/NACH bounce charges are charged and NACH provides an extra facility by submitting the available amount in favour of EMI from the borrower’s account.
Apart from the above charges there might be few other miscellaneous charges that can increase the amount. In case of regular defaults Banks/ NBFC reserve the right to increase the interest rate. Since an agreement is signed between the lender and the borrower, borrower is not left with much to say about it. In such case, the situation of the debt is completely different.
Before applying for a new loan, do not count your other financial commitments like monthly expenses, existing loan EMI’s, money for emergencies etc. A job loss or illness might have prevented you to repay the loan. But there are ways to tackle the situation. Try negotiating that ideally benefits both you and the lender. A borrower might ask the Bank/ NBFC to restructure the repayment to reduce the EMI by extending the loan tenure. After all you owe the Bank’s/ NBFC’s money, so instead of hiding or running from the situation, put it forward to the Bank/ NBFC. Borrower can also try on cutting other expenses for few months and concentrate on clearing the loan.
To possess the borrower’s property is the last priority of the lender. Though banks have the right to repossess the collateral in case of the default by the borrower. Banks/ NBFC’s are more interested to recover the money instead of starting legal proceedings against the borrower. The entire process is lengthy and time consuming and need to be followed by the bank to recover by way of possessing the property.
It’s best to plan the finances well in advance with some foresight. A financially healthy life keeps us motivated.