Getting a loan these days is simpler than ever. Banks, both private and public, and non-banking financial companies (NBFCs) have made it super convenient. Even digital lenders can approve your loan online with instant loan app in a matter of minutes.
An online loan app have streamlined the borrowing process that allows you to complete applications and receive approvals from the comfort of your home
As a result, tons of people, whether they work for a salary or are self-employed, are taking an instant cash loan left and right to cover their financial needs. But here’s the thing: With all this easy access to loans, many borrowers don’t really think through what it means to borrow money.
Sure, it’s easy to get that loan, but paying it back on time can be a bit tricky. Life has a way of throwing unexpected stuff our way, like losing a job, someone in the family getting sick, arguments at home, or surprise expenses. These things can really mess with your plans to make those monthly EMI payments on time. What happens next?
- Late payment fees:
Your lender isn’t going to pay any heed to that missed payment. One of the first things you’ll encounter is late payment fees. These are charges to your outstanding balance as a penalty for not meeting the deadline.
- Impact on credit score:
Now, let’s talk about a three-letter word that can have a big impact on your financial life – “credit score.” Missing an EMI due date can send ripples through your credit history. Your credit score may take a hit. A lower credit score can influence your ability to secure upcoming loans or lines of credit and may show higher interest rates if you are approved.
- Accumulation of interest:
Here’s the kicker: interest doesn’t stop just because you missed a payment. Interest continues to accumulate on the unpaid balance of your loan. It means that the longer you delay, the more you may end up owing.
- Legal actions:
If you thought late payment fees were the worst of it, think again. Lenders may take various actions if you repeatedly miss your EMI due dates. These can range from sending reminders and making collection calls to initiating legal proceedings. It’s a path you’d rather not thread.
- Negative financial impact:
Beyond the financial penalties, missing EMI payments can have a notable impact on your financial stability. It can disrupt your budget, potentially causing stress and financial strain. It might mean sacrificing other essential expenses to catch up on missed payments.
- Credit history:
Remember that credit score we talked about earlier? Well, it’s not just for show. Missed payments can leave a lasting mark on your credit history. These black marks can stay on your credit report for years, which will influence your ability to obtain credit or favorable loan terms.
- Communication with the lender:
Amid these challenges, one important step is to maintain open communication with your lender. In starting when you are applying for a loan, asking questions is mandatory about EMI and loan calculation, and even if you foresee difficulties making EMI payments, reach out to discuss your situation. Some lenders may offer temporary relief or alternative repayment plans to help you get back on track.
Missing your personal loan EMI due date is more than just a momentary oversight. It’s a financial ripple effect that can impact various aspects of your financial life. But with proactive communication and a plan in place, you can navigate the challenges and work toward getting back on track with your financial commitments and you’ll not hesitate while taking instant credit loans in the future.