Personal loans are high on the list of borrowers as they are easy to get from the bank however they carry a high risk with them as the rate of interest is high .
So in case you are unable to clear the EMI’s associated with your loan, what are the things you should do? Well in case of a personal loan default, what most of the borrowers do is simple – avoid the lender! But this is something, which affects your rating with the lender bank adversely a nd in case you need to approach this particular lender on a future date for a loan again, there are chances that you would be rejected. Apart from this, avoiding the lender may prompt them to take harsher steps against you for recovery.
So what should you do in case of personal loan default? Let’s work out on some options and see which one works out the best for you!
- Postpone the loan: In case of acute cash crunch, you can request for postponement of loan payment to your lender. Some banks do actually give this option to the borrowers. In case you have not checked in the terms of agreements of loan, give it a serious read and find out if you can avail such a facility from your lender. If yes, approach your bank immediately with your request. In case there are no such mentions in the agreed terms, you can still request your lending bank and hope to defer your payments to a commonly agreed period.
- Revise the Personal loan tenure – The moment you face a crisis and are unable to meet your EMI commitments, call on your lender and discuss your problems with them. You can possibly ask for revision of the loan tenure. A longer tenure of repayment means lower monthly payment as EMI. So if your lender agrees to your request, you might get a lot of breathing space.
- Set up collateral – This is one option that will go along with you and can give you reprieves in case of loan default. Well, setting up collateral against your loan means that you are giving a guarantee against the loan and no banks can refuse this. What will work in your favor is that, if you come up with collateral, you can bargain for decreasing the interest rate or increasing the payment duration.
- Closure – If you can arrange a major chunk of the amount that you need to repay, then you can ask your bank to close down the loan entirely. Most lenders in fact are willing to consider one-time payment of personal loan that is way ahead of its schedule. If you exercise this option, then you can save yourself from payment of regular interest to the lenders.