Availing of an instant personal loan online is always a financial commitment that needs to be done in a seamless manner. The first consideration at the time of taking a personal loan should be on timely repayment within the loan term. The basic reason behind non-repayment or missed payments of personal loans is that the personal loan installment amount becomes a burden on the individual. Therefore, a personal loan calculator should be used so that the monthly installment is calculated based on the monthly expenses and budget. Missing monthly installments can lead to various consequences if you are not being able to make the repayment on time. There will be severe legal actions taken against the individual in the case of non-repayment where the loan provider will take strict actions regarding the recovery of the loan.
Consequences of missing personal loan EMI payments
Missing on personal monthly installment payments is not at all a recommended practice. If you have taken a personal loan, the first priority should be making the repayment within the loan tenure. If you are missing a personal loan monthly payment, there will be various drawbacks, legal issues, and punishments for non-payment of a personal loan.
- Accumulation of liability or security is done by the loan providers in order to recover the personal loan amount that is pending or outstanding. The monthly installment concept was offered to individuals so that the personal loan repayment process does not become a burden. Paying the personal loan at once will be a burden, however, when the entire amount is divided into small monthly installments it becomes very easy for an individual to pay. However, there is a very common thing around that individuals are missing personal loan monthly installments and that will straightaway lead to accumulation of the liability. Further, there will be a penalty or a late charge that will be charged by the loan provider when you miss a particular monthly installment for the month. Missing a monthly installment means that the due date has been crossed and you have not yet paid the monthly installment amount to the loan provider. These extra late charges will get added to the monthly installment and become a burden on you.
- When you miss making the personal loan monthly installments, you will always find that your credit score gets damaged. Firstly, to get a loan you always need a credit score of more than 750. Individuals should aim for a credit score of more than 750 in order to explore various kinds of loans or other financial services at the time of need or emergency. However, when you miss making a monthly installment for your personal loan, you end up damaging the credit score. For every missed payment, there will be a dip in the credit score by around 40 to 50 points. Missing out on monthly installments will negatively impact your credit profile which makes it difficult for you to get a big-ticket loan like a home loan or car loan. Every missed payment gets recorded in your credit report. When you try to take a loan that includes a high loan amount, it becomes very difficult for you to get approval. Even if you get a loan the rate of interest will be very high.
- Legal actions will be taken if you do not pay your personal loan monthly installment beyond 180 days from the due date. Before taking any legal action, the loan provider will always give you a grace period of 180 days which is around three months time to make the payment. However, even then if you are not being able to make the repayment, legal actions will be taken against the borrower. The ultimate recovery measure will take place in the form of legal action.
How to avoid default or non-payment of a personal loan?
- It is important to avoid missing personal loan monthly installments with the help of a well-planned budget. It is one of the most prudent ways by which you can avoid a personal loan default. Every loan provider offers a very simple tool that is a loan calculator where you can calculate your monthly installment by inputting the principal loan amount, rate of interest, and loan term. When you use a personal loan calculator, it is easy for you to calculate the monthly installment that you are capable to pay based on your monthly budget. If you follow a budget, it is easy to manage your finances and decide the right installment amount that you can pay along with all other fixed obligations and expenses.
- Discuss with your loan provider if you find that there should be some relaxation or negotiation with the extension of the due date or the moratorium whatever the case should be. If you are facing any problem regarding making the repayment monthly, you need to discuss so that some possible ways can come out.
It is very important to make sure that when you are taking a personal loan for salaried individuals, you need to fulfill the repayment of the instant personal loan in the right manner without missing any monthly installment. Use a personal loan calculator so that you get to calculate your monthly installment according to your budget which does not become a burden on you.