Loan Default? Need Not Worry
With the rise in the standard of living and the race to have extraordinary lifestyles from other others, people are not hesitating to take loan commitments to satisfy their even leisure requirements.
All of the things that seem to be impossible to buy a branded car and to buy a new home are coming true can be easily accomplished with the availability of loans.
On the bank’s part, like in Home Loans, they have the provision streamline the loan terms like extending the tenure periods. However, banks are also needed to recognize the reason for increasing defaults from the past few years. According to some of the guidelines of the RBI, the banks cannot extend their tenure periods for more than one year.
How does a loan default occur?
When you avail a loan you make a loan commitment, have you ever wondered what if you lost your job, what if you get trapped in a debt trap? Loan default becomes inevitable. A default happens when a person fails to make monthly repayments on time as per the specified schedule by the bank at the time of granting the loan.
How do you know you are going to lose the ownership of the asset for which the loan was taken?
When you find yourself in a situation where you will not be able to accomplish all of your loan obligations, the best option is to run away from the lender. Banks and financial institutions understand your situation that there must be some reason for which you are unable to pay all of the EMI’s on time.
There can be different misfortunes like loss of a job, or a serious accident that may have cramped the loan borrower to the bed. This happens in a case when you have earlier EMI’s on time before the misfortune event occurred.
What to do if you are not in the situation of paying the loan Emi’s further?
A loan borrower must engage with the bank in dialogue. The bank will look forward to the feasible situations for all of the reasons and causes that you have stated. You will also get benefitted because you will be able to retain the asset against which the loan was taken. Even banks also get benefitted by this decision as the agreement will prevent entry to its NPA portfolio.
Other factors that can work as follows:
After evaluating your financial position, if the lender feels that the amount of EMI’s is what bothering you, the bank nay thinks to reschedule your debt by extending the loan tenure. Though it will also result in the increase of interest rate, on the other hand, it will result in bringing down the commitment of monthly EMI.
Conversion of unsecured to secured one:
Banks are very strict in case of unsecured loans like Personal Loan. One can lessen his EMI burden with help by offering an asset as security. Running from your debt is not the problem You will suffer from mental stress though you will also lose your asset against which the loan was taken.
Holding the payment: If you feel there is likely to be a jump in cash flow going to be forward, you can ask the bank to get temporary relief for a few months. Bank will issue a penalty for not paying within the specified time frame of the loan.
One time settlements: If you think that your financial situation is good enough, banks may consider entering into a one-time settlement with you on the basis of the case. This is one the best way to get rid of your loan value. The whole of the settlement will be done at a lesser value.
To tide all of the loan payment burdens, one must engage his lender about his problem. Bank will defiantly look forward to lessening your burden if the bank finds your reason to be genuine.
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Special Note: An individual must examine the whole EMI amount payable to the lender with the Personal loan EMI calculator.