A personal loan can be used for a variety of purposes, such as covering emergency bills, paying for marriage-related costs, or having the house fixed. We believe that we would pay the EMIs gradually, and banks readily grant loans. However, our plans don’t always work out in life. It can get challenging to make the EMI payments when we lose our jobs or our businesses fail.
How does the bank take action if the personal loan is not repaid
The bank’s initial course of action when a customer is unable to make his personal loan payments on time is to remind him by calling and sending reminders. By speaking with the borrower, the bank attempts to comprehend the issue and come up with a solution. The bank frequently offers to restructure the Personal Loan, which allows you to alter the EMI’s amount or duration.
This is not the end of the issue. The bank will take legal action if you don’t make consistent payments. You may be the target of a civil lawsuit, and the court may issue an order for the confiscation of your property. The bank may take severe action to recoup the unpaid balance and freeze your account.
It has a deep impact on the CIBIL score
A low CIBIL score means that in the future whenever you apply for a Personal Loan, car loan, home loan or credit card, the bank or finance companies will ignore you or give you the loan at a very high interest rate. This can have a profound impact on your financial freedom.
Why is it important to talk to the bank on time
If you already feel that it will be difficult to pay the next EMI, then the best step is to contact the bank on time. Banks have many schemes such as Personal Loan moratorium, EMI waiver, or restructuring options. If you tell your situation honestly, the bank can find a convenient way for you and you can be saved from legal troubles.
Why is timely payment important
We all want our financial position to be strong and we can get help whenever we need it. But if we do not repay our old loans on time, this trust is broken. Banks and other financial institutions will not trust you and in the future you may have to wander from door to door at the time of your need.
Disclaimer:This article is written for general information purposes only. It is important to contact your bank or financial advisor before making any financial decision. The bank’s process and rules may vary according to your situation.
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