Missed an EMI – We have a Solution For you!
Worried that you have missed an EMI? Wait there! You haven’t committed a crime and nothing has gone out of control and here’s what you need to do:
- Do not Panic:
Well, everyone can have a rainy day and you are not the only person who has ever defaulted so there is firstly no need to panic all you need to do is keep your cool instead of just freaking out. Banks often have customers who default on payments all the time. Although you may feel you are the only one defaulted but the fact is that you aren’t. Remember - Defaulting is not the end of the road.
- Contact your Lender Immediately:
Although you may not feel like speaking to anyone from your bank but the fact is you’re your bank is the first entity to help you in case of a default. Therefore, there is no harm is approaching them and telling the reason for default. When you approach them you must keep your loan document handy for the ease of processing – this will also show your intent to repay the loan as soon as possible.
- Initiate a dialogue with your Lender and Ascertain your Options:
One thing that largely will work in your favor is your intent to repay the loan, and you must make sure that you convey the bank in a very clear manner that you intend to repay the loan. Look into option how early you can repay the missed installments. The bank will always take into account following factors if you miss an EMI:
- Loss of Job
Legally, the bank can repossess your asset however; since it is a long process, it is not so workable solution for them to do so therefore they will try to cut you a deal. You must note that the bank is not bent upon to repossess your assets all it wants is that you must repay the loan you owe or at least most part of your loan. In case you default the bank’sNon-Asset Ratio (NPA) goes up and this reflects badly on the balance sheet of the bank. They also tend to lose out on the money that you have paid them; therefore the bank will preferably cut you a deal instead of repossessing your debt.
How to Settle your Loans?
- Avail a Refinance:
You can avail a refinance for following reasons:
- If you are paying a high loan EMI and other bank is offering you refinance at a lower EMI
- If the rate of interest at which you have borrowed the loan is high and the other bank is offering you loan refinance at lower rate of interest.
- If you are not satisfied with the services of your bank.
You can avail refinance in case you miss a loan EMI and avail a balance transfer in case of your credit card.
- Grace Period
As mentioned earlier your bank is the first entity that will encourage and assist you in making the payment if you intend to do so. It will try to understand if you can’t pay enough for a couple of months due to any personal problem. It may offer you a window period that will help you settle down in your tough times and then you can resume repaying your loan EMI. If you are not able to pay higher EMI the bank may lower your EMI to suit your pocket. Once this window period is compete the loan EMI will restart either on the same terms and conditions or along with the late payment charges. You may also be levied cheque bounce charges I your cheques have bounced due to insufficient funds.
- Lump Sum Settlements
Sometimes the banks are willing to go ahead with lump-sum settlements of the outstanding dues. They will also waive off certain charges or offer you a waiver on some charges and you can settle down the entire loan. This however is detrimental on your credit score – as it may either make it difficult or pricey for you to borrow loan in future.
- Liquidate your investments
Liquidating assets should be your last resort. If none of the options is working for you then you must go ahead and liquidate your investments to repay your debt. You can liquidate your fixed deposits, mutual funds, etc. to repay the loan. You can also use this amount to make part-payments of your principal amount.
What happens if you still fail to repay?
if you absolutely fail to repay the loan the bank will seek the repossession of the asset and your asset will be auctioned within sometime. In case of a car – it will be auctioned in 15 days, whereas in case of a home it will be auctioned within 30 days. During this time period the bank will still give you can opportunity to buy back your own property if you have enough funds.
The best is to never default and if you have defaulted it is the best to not panic and think of sane ways to repay the bank. LBIT – Loan Management System can help you keep a track of all your loans and credit card dues in a single window. By creating your portfolio at www.lbit.co.in you will not only be able to remember the due dates of your loan EMI and credit card repayment but also be able to manage your credit like an expert!